Sustainable Finance in Geneva

What is Sustainable Finance

Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making financing decisions in the financial sector, leading to more long-term financing of sustainable economic activities and projects for the lasting benefit of both clients and society at large. Environmental considerations might include climate change mitigation and adaptation, preservation of biodiversity, pollution prevention and circular economy. Social considerations could refer to issues of inequality, inclusiveness, labour relations, investment in human capital and communities, as well as human rights issues.

By adopting the 2030 Agenda for Sustainable Development in 2015, the member states of the UN declared their willingness to jointly meet the 17 Sustainable Development Goals by 2030. In 2015, governments also committed to maintaining global warming under 2°C compared to pre-industrial levels through the Paris Agreement. Subsequently, various countries have pledged to reach net-zero in the upcoming decades. Achieving the targets set by the SDGs and the Paris Agreement will require that significant amounts of money be invested in these areas.

Therefore, sustainability topics are increasingly shaping the financial market and sustainable financing has risen sharply, for banks, wealth management and investment advice, as well as pension funds and insurance companies. For example, sustainable financial investment in Switzerland surged from CHF 141.7 billion in 2015 to over CHF 1,163 billion in 2019.

UN Frameworks for Sustainable Finance

The Geneva-based UN Environment Programme Finance Initiative (UNEP FI), the UN’s largest partnership with the finance industry, supports global finance sector principles to catalyze integration of sustainability into financial market practice. The frameworks UNEP FI has established or co-created include:

• Principles for Responsible Banking (PRB) launched with more than 130 banks collectively holding USD 47 trillion in assets, or one third of the global banking sector, on 22 September 2019.
• Principles for Sustainable Insurance (PSI), established 2012 by UNEP FI and today applied by one-quarter of the world’s insurers (25% of world premium).
• Principles for Responsible Investment (PRI), established in 2006 by UNEP FI and the UN Global Compact, now applied by half the world’s institutional investors (USD 83 trillion).

These frameworks establish the norms for sustainable finance, providing the basis for standard-setting and helping to ensure private finance fulfils its potential role in contributing to achieving the 2030 Agenda and the Paris Agreement.

Sustainable Finance and Climate

Climate change is referred to by leading economists as the greatest market failure in human history, with potentially disruptive implications on the social well-being, economic development, and financial stability of current and future generations. As a result,  decision-makers around the world are faced with the dual imperative of rapidly reducing greenhouses gas emissions to mitigate climate change and adapting societies to the unavoidable impacts of global warming.

The finance sector, lying at the heart of today’s global markets, faces the same challenges, but it also is presented with the vast financial opportunities associated with overhauling economies towards climate-compatibility. On the one hand, new risks need to be understood, identified, assessed, managed, and eventually disclosed on, by institutions across financial industries. On the other hand, the transition to low-carbon and climate-resilient economies will require additional investment at an order of magnitude of at least USD 60 trillion, from now until 2050.

Therefore, financial institutions need to improve their understanding of the risks and opportunities implied. Meanwhile, public decision-makers need to investigate how they can help steer the finance sector to become an enabler, rather than inhibitor, of the climate economic transition.

Sustainable Finance for Nature

The businesses that we finance, invest in and insure depend on nature and biodiversity. The world’s ocean, forests and lands provide much of the raw materials, goods and services which underpin the global economy. At risk from over-exploitation and environmental degradation, there is an urgent need to manage these natural assets more effectively in order to ensure the health and  wellbeing of society, and stability of businesses and the financial system at the heart of the economy. The financial community has a critical role to play in safeguarding this stock of natural capital, through financing, insuring and investing in companies in the real economy.

The UNEP-FI released Principles for Responsible Banking (PRB) Nature Target Setting Guidance aim at helping the banking industry align with the Kunming-Montreal Global Biodiversity Framework (GBF) and address nature and biodiversity loss. Developed with 34 PRB signatories and key external stakeholders, the industry-first guidance aims to integrate nature considerations into the core practices and processes of banks while mobilising financial resources to bridge the annual $700 billion biodiversity finance gap.

Role of Geneva

As a hub for multilateral governance and a global financial centre, Geneva is uniquely positioned to address the challenges of finance for achieving the SDGs. Geneva is indeed the home of many international organizations – including the leading UN partnership with the finance industry focusing on sustainable finance  (UNEP FI) – as well as academic, non-governmental and private institutions active in the finance sector.

UN Environment Programme Finance Initiative (UNEP FI)

UNEP FI is a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development. UNEP FI works with nearly 400 members – banks, insurers, and investors – and over 100 supporting institutions – to help create a financial sector that serves people and planet while delivering positive impacts. By leveraging the UN’s role, UNEP FI accelerates sustainable finance with the aim to inspire, inform and enable financial institutions to improve people’s quality of life without compromising that of future generations.

Sustainable Finance Geneva (SFG)

SFG is a non-profit organization dedicated to promoting sustainable finance, comprising individual members and institutional partners. Together, they represent a one-of-a-kind ecosystem that embodies the diversity of Geneva and its determination to make sustainable finance the “new normal”. SFG promotes and encourages synergies to put Geneva on the map as one of the world’s top centres for sustainable finance through its newsletter, projects and market studies, events, and more.

Swiss Lab for Sustainable Finance (SL4SF)

The Swiss Lab for Sustainable Finance, inaugurated in September 2021, is a multistakeholder and transdisciplinary initiative promoting research and practice in finance conducted by its members. It cooperates with Swiss Sustainable Finance, Sustainable Finance Geneva, the Swiss federal and cantonal governments, international organizations, the private sector, universities from low-­‐income countries, and research centres under one (virtual) roof to achieve significant applied research impact on sustainable finance.

Swiss Sustainable Finance (SSF)

SSF strengthens the position of Switzerland in the global marketplace for sustainable finance by informing, educating and catalyzing growth. The association, founded in 2014, has representation in Zurich, Geneva and Lugano. Currently SSF unites 173 members and network partners from financial service providers, investors, universities and business schools, public sector entities and other interested organisations.

Financial Centres for Sustainability (FC4S)

The FC4S Network is a growing collective of the world’s financial centres, born out of Italy’s G7 Presidency in 2017, where green finance was a central theme of the agenda. FC4S supports its members to align themselves with the SDGs and the Paris Agreement, while providing research and guidance on emerging issues and best practices.

More actors from the Geneva ecosystem

The Canton of Geneva, Sustainable Finance Geneva, IISD and the SDG Lab at the UN Geneva conducted a mapping of the institutions active in sustainable finance in Geneva and the Swiss Romande.

Events

Learning

Geneva Finance Research Institute (GFRI)

GFRI is a center of excellence in interdisciplinary research and teaching in Finance. Based at the University of Geneva, GFRI serves as a world leading center for Sustainable Finance.

Geneva School of Business Administration (HEG)

Driven by a culture of innovation, sustainable development and multiculturalism, HEG-Geneva offers academic programs in Information Science, Business Administration, Information Systems and International Business Management. Its advanced programme in Sustainable Finance was awarded best pedagogical innovation by the FRI-PRI Awards.

Resources and News

• Just Transition Finance: Pathways for Banking and Insurance | UNEP FI and ILO | December 2023
• Climate Adaptation Target Setting | UNEP FI | 28 November 2023
• Principles for Responsible Banking (PRB) Nature Target Setting Guidance | 22 November 2023
• Leading financial institutions input into next round of negotiations to redirect finance to end plastic pollution| UNEP FI and Minderoo Foundation | 31 October 2023
• Redirecting financial flows to end plastic pollution | UNEP FI and Minderoo Foundation | 31 October 2023
• Sustainable finance in Switzerland: Areas for action for a leading sustainable financial centre, 2022-2025 | Federal Council report | 16 December 2022
• ‘Sustainable investing will be most important source of future returns’, says Geneva banking figure Patrick Odier | Geneva Solutions | 10 May 2021
• Mark Carney, UN Race to Zero campaign and COP26 Presidency launch Net Zero Financial Alliance with world’s biggest banks | Mirage News | 21 April 2021
• World’s leading insurers and reinsurers and UN Environment Programme to establish pioneering Net-Zero Insurance Alliance | UNEP FI | 21 April 2021
• 43 banks launch Net-Zero Banking Alliance as key part of consolidated Glasgow COP climate action | UNEP FI | 21 April 2021
• Net-Zero Asset Owner Alliance more than triples membership to 37 since 2019 launch | UNEP FI | 21 April 2021
• How to finance a sustainable ocean recovery – Seminal new guidance published | UNEP FI | 2 March 2021
• Critical tools and recommendations for mamanging the climate transition for the banking industry | UNEP FI | 17 February 2021
• Finance durable: concilier performance et responsabilité | UNIGE | 20 November 2020
• Financial instruments for climate change mitigation are widely available, but broader uptake needed to achieve Swiss climate goals | Swiss Sustainable Finance | 19 November 2020
• Sustainable Finance | Swiss State Secretariat for International Finance SIF

GEN Events