Green Finance Platform, INSPIRE and Grantham Research Institute on Climate Change and the Environment announce new Working Group on ‘Sustainable Finance Policy Effectiveness’

GGKP News
Organisation :
Grantham Research Institute on Climate Change and the Environment

Today, the Green Finance Platform, the International Network for Sustainable Financial Policy Insights, Research, and Exchange (INSPIRE) and the Grantham Research Institute on Climate Change and the Environment announced the launch of a new Working Group dedicated to Sustainable Finance Policy Effectiveness.

Comprising of experts from academia, financial think tanks and International Organisations, the aim of the Working Group is to support financial policymakers in the design of finance measures that will create positive impact in the real economy and facilitate the transition to sustainability. Working Group members will together assess policy and regulatory effectiveness in terms of efficiency and equity in different markets, as well as across environmental, financial and economic variables.

“Policymakers are introducing an increasing number of green finance measures. The question is how to make sure that these are as effective as possible in terms of aligning the financial system with sustainable development. Tackling this is what the new Working Group is all about." said Nick Robins, Co-chair of INSPIRE and Professor in Practice Sustainable Finance at the Grantham Research Institute of the London School of Economics.

Initiated by the Green Finance Platform (GFP), INSPIRE and the Grantham Research Institute (GRI), the Working Group was set up following a February 2021 expert roundtable on assessing the effectiveness and impact of green finance policies and regulations

The growth of green finance measures in past years has reinforced positive interactions between market institutions, regulators and policymakers. But as global disruptions – such as the COVID-19 global health crisis – increase the potential of a major recession, policy and regulatory institutions will face challenging tradeoffs between supporting financial stability, while also following through on governments’ green recovery plans and carbon neutral pledges.

This significant acceleration in policy and regulatory action on green finance has been closely correlated with market growth. However, it is not clear which regulatory actions are most effective in aligning finance with sustainability goals.

“It is critical to understand and assess the empirical environmental impacts of green finance measures to ensure both existing and future policies and regulations contribute to achieving governments’ long term net zero emissions goals” said Benjamin Simmons, Head of the Green Growth Knowledge Partnership (GGKP).

Building on the Green Finance Measures Database, a global compendium of policy and regulatory measures taken by national governments around the world to advance green finance, the Working Group focuses on two workstreams: developing a framework for evaluating green finance measures effectiveness according to a common theory of change and joint understanding of double effectiveness; and implementing the framework through a series of guidance documents focused on key objectives of financial regulations (risk management, reallocation and raising of capital, promoting institutional responsibility, and reporting and disclosure). The work also draws on the INSPIRE portfolio of research projects and partners, where the effectiveness of interventions by central banks and supervisors is a key priority.

Research outcomes from the Working Group will be brought to governments and financial regulatory authorities to help them improve their policy frameworks for green finance, strengthen policy incentives and encourage innovation in green finance products. In addition, it will support countries in achieving rapid (efficiency of measures), just (fairness of measures) and comprehensive (effectiveness of measures) decarbonization in line with their climate commitments and aspiration

 

About the Green Finance Platform

The Green Finance Platform (GFP) is one of three knowledge platforms of the Green Growth Knowledge Partnership (GGKP). It provides a clearinghouse of market, policy and regulatory innovations driving the green transformation, and focuses on sustainable finance principles, practices and protocols for banking, investment and insurance. Find more information, visit https://www.greenfinanceplatform.org.

 

About INSPIRE

The International Network for Sustainable Financial Policy Insights, Research, and Exchange (INSPIRE) is an independent research network built to support the central banks and supervisors of the Network for Greening the Financial System (NGFS) in its work to manage climate and environmental risks and mobilize finance to support the transition to a sustainable economy. The INSPIRE secretariat is co-hosted by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science and the ClimateWorks Foundation. It is guided by an Advisory Committee and has commissioned over 30 research projects across a range of critical themes. For more information, visit https://www.climateworks.org/inspire.

 

About Grantham Research Institute on Climate Change and the Environment

The Grantham Research Institute on Climate Change and the Environment was established in 2008 at the London School of Economics and Political Science. The Institute brings together international expertise on economics, as well as finance, geography, the environment, international development, and political economy to establish a world-leading centre for policy-relevant research, teaching and training in climate change and the environment. It is funded by the Grantham Foundation for the Protection of the Environment, which also funds the Grantham Institute – Climate Change and the Environment at Imperial College London

 

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