Published: 18 May 2021

Achieving the Sustainable Development Goals and the climate commitments under the Paris Agreement will require a significant shift in financial flows toward sustainable economic activities. As a global centre for both environmental governance and finance, Geneva is one of the places where this change is underway, with several institutions fostering the mainstreaming of sustainability into financial market practices.

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:

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.

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 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

Impact Investing Master Class

IFC, SECO, GFRI-UNIGE & IHEID | 19 May 2021, 14.30 – 16.00 CEST | Online

Aligning Financial Portfolios with Biodiversity Goals

UNEP FI | 26 May 2021, 10.00 CEST | Online

UNEP FI Regional Roundtables on Sustainable Finance 2021

UNEP FI | 1 June – 10 December 2021 | Online

Building Bridges

Sustainable Finance Geneva | 29 November – 2 December 2021 | Maison de la Paix, Campus Biotech, Forum Genève

Learning

Training by UNEP FI

Discover all the sustainable finance training services of UNEP FI (online & workshops)

CAS Sustainable Finance

Geneva School of Business Administration (HEG)

Introduction to Sustainable Finance

Strategic Alliance on Green Bond Market Development in G20 Emerging Economies – SEB, GIZ & PAGE | Online on UN CC:Learn

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.

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