Working Group 3
Promoting sustainable and green banking regulations

Central banks and financial regulatory authorities have recognized the systemic financial risk that arises from climate change and started promoting economic development and structural transformation, looking beyond the narrow mandate for economy stability. Instead of only relying on voluntary codes of conduct, central banks introduced regulative approaches of sustainability issues into their business. Such regulative banking guidelines are useful for establishing sustainable banking practices or introducing internal environmental standards. Regulative banking approaches can help banks to become environmentally friendly companies by using ‘green’ standards in their investment decisions and also create a level playing field for all stakeholders, enhance collaboration and capacity development.

In this working group, participants discuss examples of green banking regulations from different national contexts and develop innovative solutions how to integrate sustainable practices into financial regulations.

About the Working Group

A selected group of practitioners from governments and the private sector, representing various countries from developing and emerging economies formed the Working Group in 2016. Over the past months they jointly developed concrete prototypes aiming at initiating a process of change in their respective organization as well as policy briefs capturing the main findings within the focal area.

Meet the participants of the Working Group.

 

The following prototypes and policy briefs are being developed by PDCI core group participants of this working group:

Prototypes

Development of Green & Sustainable Banking Regulatory Framework
by Saeed Afgan, Joint Director, State Bank of Pakistan, Karachi, Pakistan

Developing a Sustainable Finance Policy for Banks and Financial Institutions in Bangladesh
by Asif Iqbal, Deputy Director, Sustainable Finance Department, Central Bank of Bangladesh, Bangladesh

Financial Innovation for Climate Investment in Developing Countries
by Odalis Francisco Marte Alevante, Economic Consultant, Central Bank of the Dominican Republic

Green Climate Program to Foster Renewable Energy Projects in Latin America
by Alejandro Miranda Velázquez, Principal Executive, Climate Change Unit, Latin American Development Bank (CAF)

Dedicated Green Credit Line for Large Renewable Energy Projects
by Muhammad Saleem, Additional Director, Infrastructure, Housing & SME Department, State Bank of Pakistan (Central Bank)

Refinance Scheme for Financing of Clean Energy Based Solutions
by Muhammad Saleem, Additional Director, Infrastructure, Housing & SME Department, State Bank of Pakistan (Central Bank)

Credit Guarantee Facility for Climate Investment Projects
by Muhammad Saleem, Additional Director, Infrastructure, Housing & SME Department, State Bank of Pakistan (Central Bank)

Prototype presentation of Muhammad Saleem

Policy Briefs

Policy Brief 1: Green Banking Regulation – Setting out a Framework
by Nannette Lindenberg, Senior Researcher, Deutsches Institut für Entwicklungspolitik (DIE), Germany

Policy Brief 2: Promoting Green Finance – Refinance and Credit Guarantees
by Mehdi Mustafa, Technical Advisor – Financial Instruments Development, Renewable Energy and Energy Efficiency Project (REEE), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Pakistan

 

Publications and further information

Sustainable Banking Network (SBN)

The SBN was formally launched on 2012 and is an informal and exclusive group of banking regulators and associations that focused on sustainable banking policies, guidelines and practices. The Network facilitates the collective learning of members and supports them in policy development and related initiatives to create drivers for sustainable finance in their home countries.

Please find out more about "IFC's Sustainable Banking Network" here!

 

UNEP Inquiry

In 2014, the United Nations Environment Programme (UNEP) established the Inquiry into the Design of a Sustainable Financial System in order to explore how to align the financial system with sustainable development, focusing on environmental aspects. The Inquiry consideres aspects of financial and monetary policies and financial regulations, and standards, including disclosure requirements, credit ratings, listing requirements and indices. It focuses on the roles of financial system’s rule-makers including central banks, financial regulators, finance ministries, other government departments, standards institutions, and market-based standard-setters such as stock exchanges, and key international organizations and platforms.

Take a look at the 2015 “Inquiry Global Report: The Financial System We Need” here!

Please find out more about the “Inquiry” here!