World Economic Forum - What to look out for
The World Economic Forum (WEF) 2023 is upon us.
Last week’s Global Risks Report showed nature and biodiversity as key areas of long-term concern for both the Forum and the wider global economy, alongside the ever-present threat of climate change and the short-to-medium term challenge posed by Russia’s war in Ukraine.
Here’s our selection of what to look out for today and tomorrow:
- Open Forum: In Harmony with Nature | 16 Jan, 18:30 CET
- Mastering New Energy Economics | 17 Jan, 08:30 CET
- Financial Institutions: Innovating under Pressure | 17 Jan, 08:30 CET
- 2023 Explained: Chief Economist Briefing | 17 Jan, 13:15 CET
- Relaunching Trade, Growth and Investment | 17 Jan, 14:00 CET
- The Jobs and Skills of a Green Transition | 17 Jan, 17:30 CET
WEF has long been a supporter of sustainable finance, having published the Green Investment Report, which provides a comprehensive overview of the global market for green investment and financing. The Growth Action Alliance brings together leaders from the public and private sectors to mobilize investment in green infrastructure and other projects that support sustainable economic growth.
Bringing together leaders from the financial and investment communities to explore ways to promote sustainable finance and investment. This helps to identify the challenges and opportunities in this field, and to share best practices and innovations that can help to drive progress.
"Channel your inner 3-year-old" | The Radical Old Idea with Dr Katherine Trebeck, on the Economics of Arrival
Why is it necessary to "channel your inner 3-year-old" to reshape the economy?
At our Radical Old Idea event, Dr. Katherine Trebeck explained the basics of her recent book the Economics of Arrival to Kaisie Rayner. For Dr Trebeck, economics should be focused not on growing indefinitely, but instead on point of "arrival": a destination that, once reached, allows us to "make ourselves at home". To get here we must channel that inner 3-year-old, to constantly ask "why?".
Why do we need more growth?
Why do we need to work 40-hour-weeks?
Why can someone work a full-time job and still be in poverty?
This focuses the mind on the point of arrival. The lack of an endpoint leaves our economies directionless, focusing too much "helping people and planet cope", remedying social aches and pains without treating their root causes.
As she explained, growth up to a point is good, providing us with the means to live a decent life. In particular, growing the incomes of the poorest in society delivers results. However, beyond a certain point, it ceases to increase happiness (in development economics, this is often known as the 'Easterlin paradox'). Just like eating ice-cream, the first few mouthfuls are incredible, but after a while, each extra spoon provides less joy than the previous one.
Building on the food metaphor, she pointed out that growth should be a means to an end. Growth for growth's sake is akin to walking into a restaurant and shouting "more!". It's far more important to know what it is that you want more of, such as looking after citizens, providing food, health services, and a decent material standard of living.
Some examples of economies that have arrived, or have the potential to arrive, include Japan and Costa Rica. Japan has a high standard of living, and relatively low inequality without extensive redistrubution. However, without a clear endpoint, the country suffers from high worker stress, when in fact it could "take its foot off the pedal" and lead a better life by slowing down.
Another exaple is that of Costa Rica, which is a middle income country that has thrived in terms of health, social and nature outcomes, because it has focused on outcomes rather than economic growth for its own sake.
The event concluded with a lively audience discussion which looked at how to practically ditch GDP, whether the focus on predistribution over redistribution was viable, the role of elites and more.
Find the Economics of Arrival at https://policy.bristoluniversitypress.co.uk/the-economics-of-arrival
GEFI launch Path to COP28 campaign
Leading financial institutions came together in Dubai this week for the launch of our ‘Path to COP28’ campaign to finance a greener global economy. The campaign features a number of partners, including the Dubai International Financial Centre (DIFC), which hosted the event. The COP28 summit in Dubai will be key to the success of Glasgow’s COP26
The launch explored the role of the finance sector in the transition to a low-carbon and climate-resilient economy in the run-up to the global climate change summit in Dubai in November 2023. It saw the presentation of a new report into green sukuk, an Islamic finance product analogous to bonds, our new SDG Insight Series, and the Tayyib framework, designed to integrate impact with Islamic finance. Find out how to join the campaign.
While COP27 in Sharm El-Sheikh is just a month away, COP28 will see many financial institutions make major progress reports on and updates to the commitments they made at COP26 last year. At the Glasgow summit, many signed up to the GFANZ agreement led by former Bank of England Governor Mark Carney and made individual net zero commitments.
Our campaign is designed to encourage banks, asset management firms and other financial companies to demonstrate their commitment to the climate agenda, building upon the success of its Path to COP26 campaign. It will consist of a series of activities and events, including a report on the challenge public sector pensions face in achieving net zero.
According to the United Nations Environment Programme Finance Initiative, the climate transition will require additional investment of at least $60 trillion from now until 2050 – around $2 trillion every year – meaning private sector commitments are vital to tackling the climate crisis.
And bold climate action could deliver at least US$26 trillion in economic benefits through to 2030, compared with business-as-usual, a report from the Global Commission on the Economy and Climate found.
David Pitt-Watson, Visiting Fellow at Cambridge Judge Business School and former President of United Nations Environment Programme Finance Initiative (UNEP FI) said that “As part of the Glasgow Financial Alliance for Net Zero (GFANZ), the finance industry set big aspirations. At COP26 in Glasgow, $130 trillion of invested assets signed up to the GFANZ, enough to fund the transition. COP28 in Dubai is where we find out how far these financial institutions have been able to deliver.”
He added that “finance, indeed our entire economic system, depends on climate stability. From COP21 in Paris in 2015, investors have urged policy makers not to delay in taking tough action. Together with global political leaders, the finance industry must play its part in creating and funding sustainable commerce. If it can, the future can be bright. If not, the alternative is catastrophic for us all.”
Graham Burnside, Senior Advisor to the Global Ethical Finance Initiative explained that “our Path to COP28 campaign seeks to encourage and support financial institutions in transitioning from commitment to actual implementation, measurement and reporting”, going on to point out that “finance can be a force for positive change” and asking for “organisations from across the globe to sign up to our Path to COP28 campaign to help us assist the financial sector to commit to practical efforts to tackle climate change.”
Arif Amiri, Chief Executive Officer of Path to COP28 host partner DIFC Authority said “DIFC and GEFI are delighted that the financial services sector is the first industry to launch a programme that aligns with the UAE government’s COP28 agenda.”
He added that “DIFC is perfectly placed to be host financial centre for the Path to COP28 programme given the progress we have already made and will continue to make on climate related matters with our clients. We are looking forward to working with GEFI and senior members of the local, regional, and international finance community to embrace this initiative and truly make a difference.”
DIFC Launches Programme with Global Ethical Finance Initiative Aligning with UAE’s COP28 Agenda
DIFC Launches Programme with Global Ethical Finance Initiative Aligning with UAE’s COP28 Agenda
- Programme aligns with UAE and Dubai’s COP28 agenda
- DIFC is host financial centre for 12-month path to COP28 programme, working with Global Ethical Finance Initiative (GEFI)
- DIFC and GEFI invite members of global finance community to join the programme
Dubai, UAE; 24 October 2022: Dubai International Financial Centre (DIFC), the leading global financial centre in the Middle East, Africa and South Asia (MEASA) region, today announced a year-long partnership with the Global Ethical Finance Initiative (GEFI), ahead of the United Nations Framework Convention on Climate Change’s 28th Conference of the Parties (COP28) taking place in Dubai. COP28 will be held during November 2023 and see world leaders from the public and private sectors congregate to make progress on climate related matters.
With Dubai hosting COP28 and DIFC being a significant contributor to the sustainable economic growth of the Emirate, the Centre is leading by example and announcing their path to COP28 partnership just over 12 months before the event takes place.
DIFC and GEFI will drive change across the world’s financial industry relating to delivering Net Zero; unlocking Islamic Finance; financing nature and biodiversity; and financing the sustainable development goals. As host financial centre for GEFI’s Path to COP28 programme, DIFC will support a series of report launches, roundtables and community engagements during the next 12 months.
The partnership was launched at DIFC with a keynote presentation by Dame Susan Rice, one of the most influential women in banking, who Chairs the GEFI Global Steering Group. Dame Susan, the first woman to head a UK clearing bank, also Chairs the Financial Services Culture Board in the UK and enjoyed a seven-year term as a non-executive Director of the Bank of England.
Attendees also heard from the General Council for Islamic Banks and Financial Institutions (CIBAFI) Secretary General, Dr. Abdelilah Belatik, and Fajr Capital’s CEO, Iqbal Khan.
Arif Amiri, Chief Executive Officer of DIFC Authority said: “DIFC and GEFI are delighted that the financial services sector is the first industry to launch a programme that aligns with the UAE government’s COP28 agenda. DIFC is perfectly placed to be host financial centre for the Path to COP28 programme given the progress we have already made and will continue to make on climate related matters with our clients. We are looking forward to working with the GEFI and senior members of the local, regional, and international finance community to embrace this initiative and truly make a difference.”
Omar Shaikh, Co-Founder and Managing Director of GEFI said: “Our Path to COP28 campaign seeks to encourage and support financial institutions in transitioning from commitment to actual implementation, measurement and reporting. The maturity and foresight of the UAE government and DIFC as a world-class financial centre is critical to encouraging the regional financial sector to ramp up its environmental awareness and commitment towards achieving the COP targets.”
The partnership aligns with DIFC’s Strategy 2030 and reflects its progress on driving Dubai’s reputation as the region’s leading sustainable financial hub. This is being achieved through its chairmanship of the Dubai Sustainable Finance Working Group (DSFWG) which was established in 2019.
The Path to COP28 initiative also complements the recent launch of the DSFWG self-assessment tool for measuring the maturity of Environmental, Social and Governance (ESG) policies and practices in companies.
GEFI’s previous Path to COP26 campaign was supported by the City of London Corporation and brought together several signatories, including 20 financial institutions representing £2 trillion in assets, to drive finance for positive change at the Glasgow COP.
Members of the finance community can find out more about the Path to COP28 – and register their interest to be involved – on difc.ae.
–Ends-
About Dubai International Financial Centre
Dubai International Financial Centre (DIFC) is one of the world’s most advanced financial centres, and the leading financial hub for the Middle East, Africa and South Asia (MEASA), which comprises 72 countries with an approximate population of 3 billion and an estimated GDP of USD 8 trillion.
With a close to 20-year track record of facilitating trade and investment flows across the MEASA region, the Centre connects these fast-growing markets with the economies of Asia, Europe and the Americas through Dubai.
DIFC is home to an internationally recognised, independent regulator and a proven judicial system with an English common law framework, as well as the region’s largest financial ecosystem of almost 30,000 professionals working across over 4,000 active registered companies – making up the largest and most diverse pool of industry talent in the region.
The Centre’s vision is to drive the future of finance through cutting-edge technology, innovation, and partnerships. Today, it is the global future of finance and innovation hub offering one of the region’s most comprehensive FinTech and venture capital environments, including cost-effective licensing solutions, fit-for-purpose regulation, innovative accelerator programmes, and funding for growth-stage start-ups.
Comprising a variety of world-renowned retail and dining venues, a dynamic art and culture scene, residential apartments, hotels and public spaces, DIFC continues to be one of Dubai’s most sought-after business and lifestyle destinations.
For further information, please visit our website: difc.ae, or follow us on LinkedIn and Twitter @DIFC.
For media enquiries, please contact:
Omar Nasro | ASDA’A BCW
+9714 450 7600
omar.nasro@bcw-global.com
www.asdaa-bcw.com | www.arabyouthsurvey.com
Rasha Mezher | Dubai International Financial Centre Authority
Consultant, Marketing & Corporate Communications
+97143622451
t-rasha.mezher@difc.ae
On the Path to COP28: how we got here, and what to expect for finance
Our Path to COP28 campaign is building momentum for climate action from finance at COP28, and we will launch the campaign on 24 October in Dubai.
While COP27 in Sharm El-Sheikh is just a month away, COP28, taking place in Dubai in 2023, will see many financial institutions make major progress reports on and updates to their COP26 commitments. Our campaign builds upon the success of the prior Path to COP26 campaign to coordinate the finance sector ahead of this crucial summit.
In this blog, we take a look at what COP is, the role of finance, some of the key milestones along the path to Glasgow, and what to expect in Sharm El-Sheikh and Dubai.
What is COP?
COP stands for Conference of the Parties to the United Nations Committee on Climate Change. COPs are where the world comes together to agree on climate action, on how to mitigate climate change and adapt to it. As Manuel Pulgar Vidal, the COP20 President from Peru told us at our 2021 summit, this is no mean feat, as COP is “a multilateral process, with almost 200 countries: so everybody counts”.
Finance at COP
But what does all this mean for the financial industry? The early COPs like Kyoto were focused mainly on getting governments to agree on the basics of climate science, and what the targets for carbon emissions reduction should be in order to prevent or minimise.
Since then, attention has shifted increasingly towards action, looking at how we actually achieve the targets that the political process produces. One core component of this is finance. Most agree that addressing climate change requires significant transformation of our economies, particularly around the energy sector. Creating new industries and reshaping existing ones requires investment; while governments can provide some of the funding, the sheer scale of the challenge means that private finance must play a significant role. Since COP21, finance has been playing an increasingly important role at the summit.
The history of COP
COP1
The first summit, COP1, took place in Berlin in 1995. The foundation for the summit, and for the UN’s climate work, came from the Earth Summit in Rio in 1992. Presiding over the summit was Angela Merkel, Germany’s Environment Minister at the time.
COP3
A landmark early achievement of the COP process was the signing of the Kyoto Protocol at COP3 in 1997. The agreement set the groundwork for climate diplomacy, and was refined at subsequent COPs. However, key emitters such as the US withdrew from the treaty, and it took until 2005 to come into force.
COP6
COP6 at the Hague in the Netherlands saw a crucial issue come to the fore: paying for climate mitigation and adaptation in developing countries. Lack of agreement over this central question led to the collapse of the talks.
COP15
In 2009, COP15 in Copenhagen saw massive protests and was generally regarded as a failure. Many criticised the summit for not producing an ambitious, legally binding agreement in line with scientific recommendations. Others felt this was never a likely outcome given political considerations.
COP16
A solution to the “who pays for climate action?” question was agreed at COP16 in Mexico: the $100bn Green Climate Fund for developing countries. More than 10 years on, this has still yet to be delivered: the failure to do so has harmed trust in the process. There has been disagreement over how much public and private finance should contribute, and the recipients of funding.
COP21
In 2015 in Paris, COP21 saw the signing of the Paris Agreement, and the first real participation of private finance. The agreement represented a consensus that addressing climate change requires significant economic transition, particularly in the energy sector.
As finance is key to economic transition, the agreement included international mechanisms to promote climate-friendly finance, carbon trading, technology transfer and adaptation to climate change impacts. It also set the stage for the Taskforce on Climate-related Financial Disclosures, or TCFD, which has made its way into law in several countries in the years since, and significantly boosted climate bonds.
A notable contribution from private finance was a major petition to governments to commit to climate action: prior to that it was “assumed that capital markets opposed such regulation”, according to David Pitt-Watson, Chair of UNEP FI during the summit.
COP26
COP26 in Glasgow, saw the most significant progress since Paris, with the signing of the Glasgow Climate Pact. It still received a mixed reception from climate advocates, many of whom felt the agreement did not go far enough on securing binding targets, such as the last-minute amendment to “phase down”, rather than “phase out” coal. Arguably the most significant commitment was that made by all nations to come back before COP27 with enhanced emission-cutting pledges.
Nonetheless, the summit did see greater recognition than ever, from all across society, of the perils of climate change. One aspect of this was more involvement from financial institutions. The Glasgow Finance Alliance for Net Zero, or GFANZ, was launched, aiming to unite many existing initiatives, while individual financial institutions from around the world made net zero commitments of their own.
The future of COP
COP27
At COP27, in Sharm El-Sheikh, success is likely to be judged on four core areas: Mitigation, Adaption, Climate Finance and Loss and Damage. A key focus across the summit is likely to be issues for developing countries – as the COP process is driven by the host country’s diplomatic service, key themes often reflect that country’s priorities. On the finance side, we expect to see updates on potentially strengthening GFANZ, progress reports from financial institutions and a focus on nature and the need for nature-based solutions to climate change.
COP28
COP28 in Dubai will see the results of the first major stocktaking on the Paris Agreement. The process began at COP26, and will conclude in Dubai. This process is likely to be mirrored in the private finance side, as financial institutions provide results on their COP26 commitments, and update them.
Our Path to COP28 campaign will drive action from finance at COP28, and launches on 24 October in Dubai.
Why Scotland is the natural home of ethical finance – Chris Tait (The Scotsman)
This article was authored by GEFI Chief Operating Officer Chris Tait, and originally appeared in The Scotsman at https://www.scotsman.com/news/opinion/columnists/why-scotland-is-the-natural-home-of-ethical-finance-chris-tait-3814486
Even with the highest increase for nearly three decades, 1.75 per cent is way below the levels recorded in the late ’90s and the early to mid-noughties.
That’s why, in recent years, many who can afford to do so have turned to investment funds instead.
There is always risk attached to this, and with a recession looming and inflation rampant, it’s vitally important to remember that values can go down further. But the flip side is that you could be buying at a low.
Anyone considering putting money into funds is strongly advised to do so for at least five years, giving more time to ride out the impending bumps in the market.
But another key consideration is how to invest sustainably.
YouGov surveys for the Edinburgh-based Global Ethical Finance Initiative show that Scots consider it important that their investments reflect their views about ethical, environmental, and social issues.
Yet many people who have pensions don’t quite think of themselves as investors, when in fact they are. Others who invest their savings directly in funds perhaps don’t realise the options available to them.
People want financial services companies to take the lead and do more to help.
It’s clear that many people do not yet know how to make responsible investment decisions for themselves, which is why we need to explore awareness-raising and education ideas so that everyone is empowered to take the decisions which reflect their own ethical values.
Next month, the Ethical Finance Global 2022 summit will be held in Edinburgh, which will focus on the role of finance in today’s world, including protecting and restoring nature and biodiversity. With more than half of all Scots indicating the importance of taking ethical, environmental and social issues into account in their investments, Scotland is the natural home of ethical finance.
Edinburgh hosts a large financial sector, and this is something which the institutions must address in the wake of the COP26 climate summit.
Among those attending who will call for greater action are the head of the World Bank and the Bank of England.
Financial institutions undeniably have more to do – and that will be highlighted at the summit – but sustainable investment choices are already becoming increasingly available.
Yet standing in the way of that is a clutter of vague jargon. A fund can be called sustainable, ethical, responsible, green, stewardship, or combinations of these labels and more.
Such labels are used quite inconsistently and two funds with sustainable in their names may mean two different things.
Regulation is trying to help sort this out for the investing public, but time will tell if it will be able to.
Proponents will tell you that sustainable investing will make you more money than alternatives and the critics will tell you it will make less.
As with any investment, returns can vary, but by choosing to invest responsibly you can put your money more in line with your world view and help address the sustainability challenges the world faces.
Scots want more responsible finance: GEFI study covered in The Herald, Insider Magazine and Scottish Financial News
Our new study shows that most Scots want finance firms to take the lead and deliver more responsible investment to tackle climate change.
We commissioned YouGov to poll 1,002 adults earlier this month, finding that a quarter thought the pandemic had increased their interest in responsible investment.
54% think it is important that their current or future financial investments reflect their personal concerns about ethical, environmental and social issues, while 38% said this was not important.
Chris Tait said: “Edinburgh hosts a large financial sector, and this is something which financial institutions must address in the wake of COP26."
Read more in Insider, Scottish Financial News or p2 of today's Herald!
https://www.insider.co.uk/news/finance-firms-must-reflect-scottish-27754002
Impact Investing: Verification under the Operating Principles for Impact Management
Embedding impact is a challenge and so is its verification. There has been limited guidance on it in the market. To address this challenge, the International Finance Corporation (IFC) launched the Operating Principles for Impact Management (the Impact Principles) in April 2019.
What are the Impact Principles?
The Impact Principles provide a framework of leading market practice for investors for the design and implementation of their impact management systems across the investment lifecycle.
Source: https://www.impactprinciples.org/
The Impact Principles are not limited to specific types of impact investors, sectors, geographies or asset types but are widely applicable and can be adopted for specific funds or vehicles or the portfolio. There are currently more than 150 signatories from more than 35 countries with AUM exceeding $450 million.
Why are the Impact Principles important?
Investors new to impact can use it as the start of their impact journey to design their systems and processes and investors that are already operating in impact can use it to benchmark their practice and look for areas of improvement.
The Impact Principles provide a structure for embedding impact. Each principle has action points and associated guidance, found here.
Becoming a signatory and undergoing verification
An organisation must first submit a Signatory Letter confirming its adoption of the Impact Principles. Within 12 months and annually thereafter, signatories must produce a Disclosure Statement in a standardised format describing their alignment with the Impact Principles. The Disclosure Statement is published on the Impact Principles as well as the signatories’ website.
Alongside the Disclosure Statement the alignment of the impact management systems and processes with the Impact Principles must be independently verified. The frequency of verification is not mandated by the Impact Principles, instead signatories must disclose the frequency of verification along with the reason for their choice.
GEFI’s verification for SIS Ventures
Principle 9 of the Impact Principles requires signatory investors to “[p]ublicly disclose alignment with the Impact Principles and provide independent verification of the alignment”.
In accordance with Principle 9, GEFI has recently completed the verification of the impact management systems and processes for SIS Ventures. Formed in 2018, SIS Ventures is a part of the Social Investment Scotland Group, a leading Scottish impact investor. SIS Ventures’ aim is to support and grow high impact organisations through access to mission-aligned investment and it became a signatory of the Impact Principles in July 2021.
GEFI reviewed and documented SIS Ventures’ impact management systems and processes in line with each of the Impact Principles in turn. This was done through interviews with staff and review of key documentation. GEFI produced the verification statement and provided SIS Ventures with recommendations on how its impact management systems and processes could be further developed.
Next step for verification methodology
As an independent verifier, GEFI developed its own methodology to complete the verification.
Tideline, an impact investing consultant, has produced a report on investor alignment with the Impact Principles which includes verification methodology and scoring.
Verifiers developing their own verification methodology has both pros and cons. On one hand, innovation and experimentation are needed in this relatively new field. On the other, there is a risk that different methodologies may end up undermining the integrity of the verification process.
Moving forward, the Impact Principles may benefit from releasing methodology guidance and checklists for verifiers to ensure that verifications are completed in a standardised or similar way.
SIS Ventures quote
“As signatories to the Operating Principles for Impact Management we need to work with external experts to satisfy the requirements of Principle 9. The team at Global Ethical Finance Initiative were methodical and robust in their verification approach, whilst also highly professional and approachable. The team also provided us with a useful short report on how we could further improve our impact processes and this will help inform our future practice. I would confidently recommend GEFI’s services in this area to others.” Lindsay Wake, Head of Impact, Social Investment Scotland.
Please join us in Edinburgh on 6 September 2022 for our annual ethical finance summit, “ESG in a Volatile World – Profit, Purpose or Politics?”
GEFI & UNDP release Guide to Help Malaysian Banks Support SMEs on Sustainability
On Wednesday 29th June 2022 United Nations Environment Programme Finance Initiative (UNEP FI), in partnership with Global Ethical Finance Initiative (GEFI), published a “Guide for Malaysian Banks supporting SMEs in the Sustainable Recovery from Covid”.
The Guide, launched at the inaugural Ethical Finance ASEAN 2022 summit, aims to assist Malaysian banks in helping Small to Medium-sized Enterprises (SMEs) to embed sustainability / ESG practices as business-as-usual and suggests practical steps and examples.
The findings presented in the Guide, as well as the development of a new Framework for banks, are based on the findings of a desk-based review and interviews with 13 Malaysian and international banks that took place earlier this year.
SMEs play a vital role in the Malaysian economy and, as has been the case across the globe, the research found that Malaysian SMEs have been negatively impacted by the COVID-19 (covid) pandemic. As Governments commit to ‘building back better’ the recovery from covid provides an opportunity to align spending and initiatives towards creating a more sustainable future and taking action to combat pressing issues such as climate change.
The Guide found that SMEs in Malaysia are at an early stage of embedding sustainability as, for many, the focus has been on survival during the covid pandemic. While many corporates have made headway on sustainability initiatives, especially around net zero commitments, there is a risk that SMEs are left behind.
Banks are uniquely positioned to support SMEs in taking action on sustainability, both through finance related activities (such as developing sustainability products) and broader activities (such as capacity building). The research found that during the covid pandemic, Malaysian banks primarily supported SMEs through the disbursement of Government funding and ensuring continuity of business through digitalisation. There has been some wider activity to date but, as we recover from the covid pandemic, momentum is building amongst Malaysian banks to further support SMEs on their sustainability journey and further develop areas such as product development, capacity building, offering a one-stop-shop for sustainability initiatives and accelerator programmes.
The Guide provides a Framework for action that Malaysian banks can take in supporting SMEs in the sustainable recovery from the covid pandemic in three key areas:
- Bank Wide Approach;
- Supporting SMEs; and
- Product Development.
The Framework - which is intended to supplement existing sustainability tools, frameworks and initiatives rather than replace them - identifies 19 key suggestions for bank wide approach, supporting SMEs and provides a step-by-step guide for product development. Each of these areas is supported by several practical steps augmented with of work already being undertaken by Malaysian and international banks.
Banks can play a significant role in supporting SMEs on their sustainability journey and the Guide highlights the appetite amongst Malaysian banks to further assist SMEs in progressing their sustainability journey. Further support could be through assisting SMEs in measuring greenhouse gas (GHG) emissions, educating internal staff, capacity building for SMEs, further development of sustainability products and a greater consideration of the social and governance aspects of sustainability.
The Guide concludes that responsibility for assisting SMEs on sustainability should not lie with banks alone and support is also required from Government and other industry players to incentivise action.
Click Here to visit the UNEP FI page to access the Guide.
John Kay joined us today to discuss the difference between risk and uncertainty, what this means for finance and how societies can collectively deal with the unknown by ensuring systems build in resilience.
As John explained to series host Kaisie Rayner FRSA, risk can be estimated, while uncertainty is truly unknowable, a distinction forged in the wake of the Great Depression.
Over the last half century, finance and economics have gradually merged these two concepts. The economist Milton Friedman explicitly stated, in his quest to model society as a collection of perfectly informed utility maximiser.
This reflects a general bias towards quantifying phenomena among policymakers, a fear of the unknown and the unknowable. Models should be treated not as quantitative answers to these intractable problem, but rather tools to be used to organise thinking.
Sir John Kay argued that this is reflected in the paradox of the perfect map; if a map were to represent reality perfectly, it would be a 1:1 copy of it, and therefore no map at all.
What a map or model should do is simplify information in a way that retains what is useful while cutting out other information. London’s Tube map is a great way of navigating the city by train, but much less helpful on foot.
By treating models as gospel, rather than helpful simplifications, we risk ignoring that which has been left out. Resilience and robustness – which are key to dealing with uncertainty – will be viewed as inefficiency.
An example of this is the global financial crisis, where sophisticated risk modelling and the unrelenting pursuit of profit sidelined experienced professional judgement. Another is that of privatisation of public services, where resilience and robustness can be cut to make profit, with the state ready to step in if the unexpected does happen.
Purchase Radical Uncertainty: https://lnkd.in/epTk7ujb or https://lnkd.in/gHD4h5P3
Find out more about our Radical Old Idea series https://lnkd.in/eKYu2uny
Watch the full webinar on our YouTube page.