Jakarta, February 26, 2017—Emerging
markets have become a major force in driving development and fighting climate
change as 34 countries have initiated banking reforms to expand sustainable
lending, according to the first comprehensive Global Progress Report of
the Sustainable Banking Network, an IFC-supported organization of banking
regulators and associations.
Those 34 countries account for $42.6 trillion in bank assets—more than
85 percent of total bank assets in emerging markets. Some are wealthier
than others, but all of them have made progress in advancing sustainable
finance. Eight countries—Indonesia, Bangladesh, Brazil, China, Colombia,
Mongolia, Nigeria, and Vietnam—have reached an advanced stage, having
implemented large-scale reforms and put in place systems for results measurement.
These reforms require banks to assess and report on environmental and social
risks in their lending operations and put market incentives in place for
banks to lend to green projects.
“This progress is an important step toward achieving the Sustainable Development
Goals by 2030,” said Ethiopis Tafara, IFC’s Vice President for Legal,
Compliance Risk and Sustainability. “It shows that even the poorest countries
can adopt sustainable finance reforms. The Sustainable Banking Network
has demonstrated in a short time how much can be achieved when regulators,
policymakers, trade associations and development institutions collaborate
to advance sustainable finance.”
The report provides practical indicators and tools for countries to apply
to their own domestic markets, regardless of their size or stage of development.
This is important because it facilitates learning by all members and accelerates
the pace of change. It is based on an innovative results-measurement approach
that has been agreed by all 34 member countries—a remarkable achievement
that is breaking new ground for measuring progress at the global level.
“The intention of the report is to provide practical information to SBN
member countries to help them develop public policy. It is a useful guide
not only for regulators and the governments, but also for banks, steering
them towards what they could and should do from the bottom up,” said Edi
Setijawan, Sustainable Finance Director, Indonesia Financial Authority
(OJK), and a co-Chair of SBN Measurement Working Group that led the development
of the unique methodology behind the report.
The report positively underscores Indonesia’s Financial Services Authority
(OJK)’s comprehensive Sustainable Finance Roadmap, which includes 19 medium
and long-term activities to be conducted between 2015 and 2024. The Sustainable
Finance Umbrella Policy released in July 2017 was a major milestone of
the Roadmap, which introduces requirements such as the preparation of a
sustainable finance action plan and sustainability reporting for the largest
banks. OJK has also established a number of initiatives to support further
adoption of sustainable practices across the banking sector, including
the creation of a Sustainable Finance Forum and an annual Sustainable Finance
Because the new policy covers the entire financial sector, including non-banking
institutions, pension funds and insurance, the report suggests practical
guidance to assist financial institutions in managing the specific environmental
and social risks of their activities. Guidance such as definitions, tools
and methodologies could also help encourage green finance flows. The report
also points to developing fiscal and non-fiscal incentives for financial
institutions and increasing internal capabilities to monitor the implementation
of the Sustainable Finance Action Plans produced by banks.
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
in the toughest areas of the world. In FY17, we delivered a record $19.3
billion in long-term financing for developing countries, leveraging the
power of the private sector to help end poverty and boost shared prosperity.
For more information, visit www.ifc.org
The Sustainable Banking Network (SBN) is a knowledge and capacity-building
platform of financial regulators, banking associations, and environmental
regulators from emerging markets committed to developing sustainable finance
frameworks based on national contexts and priorities, as well as international
good practices. IFC acts as the Secretariat of the Network, playing the
role of facilitator and technical adviser to SBN. For more information
on the Sustainable Banking Network, visit www.ifc.org/sbn.