Shifting Gears II

Data needs to be better and more widely available to make climate and sustainable finance truly transformative on a global scale

The relatively poor quality of data and its limited availability are the major challenges facing the world’s financial centres as they embrace climate-friendly investment and sustainability practices.

Despite the challenges, including the huge impact of the COVID-19 pandemic, global financial centres have made significant progress in developing sustainable finance ecosystems. They have doubled or in some cases even tripled capital outflows toward low-carbon transition and the achievement of the Sustainable Development Goals (SDGs).

The FC4S Shifting Gear II report which is based on its third Annual Assessment Program, developed in partnership with PwC, an FC4S partner and co-funded by EIT Climate-KIC, was launched during the annual Abu Dhabi Sustainable Finance Forum 2021, hosted by Abu Dhabi Global Market (ADGM). 

The report which 24 of its 30 members in 2020 (80%) responded to, shows that between 2018 and 2020, the financial centres have made significant progress, regardless of their size or maturity level.  Financial centres across all continents are mobilizing their resources, connectivity, expertise, and capital to align with the objectives of a sustainable financial system. They are working with other institutions and private actors to build high-level approaches and initiatives to make significant progress at a national level.

As Financial Centres strive to deliver capital to support the low-carbon transition and the achievement of the Sustainable Development Goals, financial centres also reported several key challenges. These include:

• Thirst for data: Data quality and availability is the primary challenge faced by two-thirds of financial centres. Leading centres face issues on comparability and market sizing, while private actors struggle to identify which capital flows can be considered green and sustainable.
• Going beyond climate: Climate Change continues to be a major focus for any private and public institution, and it remains a point of entry into sustainable activities. Social and biodiversity themes are emerging.
• Public authorities are key for take-off: Public authorities can play an important role in encouraging the implementation of Paris alignment commitments, and the SDGs, addressing shared challenges and promoting the use and harmonization of assessment tools and methods.
• Policy and regulations remain a critical driver: Four out of five financial centres consider that new policy initiatives can act as a “positive enabler” or even be a “major driver” of sustainable finance.
• Increasing international collaboration: Nearly half of centres have identified “building connectivity” in their top 3 priorities, the continuous expansion of the FC4S network illustrates such a trend.
• Professional development and education: Skill shortage may prevent public and private institutions alike from going beyond commitments and scaling up sustainable financial activities, but centres are reporting a growing number of sustainable finance programmes and training available to students and workers.

For more information, please contact:

Florencia Baldi, Head of FC4S & SIF Knowledge Hub 

Email: florencia.baldi@undp.org