G20 and beyond: reporting as an enabler of a sustainable financial system. Eszter Vitorino Sr Manager Public Policy

Transcription

1 G20 and beyond: reporting as an enabler of a sustainable financial system Eszter Vitorino Sr Manager Public Policy 13 October 2016

2 How to use Webex

3 Webinar Outline Introduction What is the financial system? FSB TCFD: Live Poll Results - Mumbai Event Driving forces towards a sustainable financial system NVG, SEBI and our collaboration with BSE Q-A

4 What is the financial system? Are there enough resources for all? Distinction between financial and non financial factors that can affect the bottom line in artificial All material environmental, social and governance issues have the potential to undermine economic returns 2016 World Economic Forum Global Risk Report: Most likely risks with the highest impact factors are: Failure of climate-change mitigation and adaptation Water crises Large scale involuntary migrations Biodiversity loss and ecosystem collapse Energy prices shock

5 Capital Markets Ecosystem Who are the main actors Regulators Others Exchanges Listed companies Investor networks ICI, PRI, etc Sell side investment services Asset owners Buy-side fund managers

6 Main global processes Driving forces towards a sustainable financial system UNEP Inquiry into the Design of a Sustainable Financial System G20 Green Finance Study Group (IMF, OECD, WBG, etc) G20 Communique from Hangzhou Summit Puts the 2030 Agenda for Sustainable Development in the forefront Endorses the G20 Agenda Towards A More Stable and Resilient International Financial Architecture FSB TCFD (Recommendations for G20, 2017) TCFD is working to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers etc.

7 FSB TCFD: Live Poll Results - Mumbai Event 83% stated their firm consider climate change issues at the board and senior management level 62% of respondents confirm that their firm considers climate risks and opportunities 53% respondent confirmed that their firms have GHGrelated targets Only 20% are considering to conduct a 2-degree climaterelated scenario analysis

8 Main global processes Driving forces towards a sustainable financial system Sustainable Development Goals 17 goals, 196 targets, indicators Incoming President of UN General Assembly, Peter Thomson, puts financing for sustainable development center stage US$5-7 trillion a year needed to implement the Sustainable Development Goals EU Capital Market Union Action Plan Establishment of expert group European Fund for Strategic Investment

9 The Financial System We Need From Momentum to Transformation 1. The global financial system needs reshaping to finance an inclusive, prosperous and environmentally sound future in other words: to achieve sustainable development. 2. This momentum has dramatically increased over the past year. 3. Policy, market and broader international drivers are underpinning this momentum. 4. Today s momentum remains inadequate to deliver the transformation needed to finance sustainable development. 5. Key steps can align the purpose and impact of the financial system to serve the real economy in the transition to sustainable development Source: ineviewerpr2016/

10 Alignment of the Financial System Finance Mobilized for Sustainable Development Source: ineviewerpr2016/

11 Momentum Is Not Enough Source: ineviewerpr2016/

12 PRI Blueprint for Responsible Investment Nine priority conditions to address 1. Short-term investment objectives 2. Attention to beneficiary interest 3. Policy maker influence on markets (e.g. fiduciary duty) 4. Capture of government policy by vested interest Source: 5. Influence of brokers, rating agencies, advisors, and consultants on investment decisions 6. Principal-agent relationship in the investment chain 7. Culture of financialisation and rent-seeking in market actors 8. Investment incentives misaligned with sustainable economic development 9. Investor processes, practices, capacities and competencies

13 Responsible investment or the rise Allocating for impact Source: Social Impact Investment Taskforce / PRI: From Principles to Performance

14 SRI Assets by Strategy and Region Europe and US in the lead mainly through negative / exclusionary screening Source: 2014 Global Sustainable Investment Review

15 Mainstreaming sustainable finance Sustainable finance Main tool is currently the green bonds Social bonds (e.g. on women empowerment) still niche Pension funds demonstrating leadership FinTechrepresents an opportunity to bring investors and investees closer together Currently mainly listed equity and fixed income opportunities (and some real estate investment ones): how can this spill over to the other asset classes?

16 GRI s critical role in the global transition GRI Standards First global sustainability reporting standards Already over companies in over 90 countries use GRI GRI referenced in over 40 jurisdictions Interrelated, modular structure for easier application and updating Represents the global best practice Reporting both on negative impacts and positive contributions Reporting on performance and progress on targets (forward looking)

17 References to GRI In addition to a strong relationships with SSE, WFE and IOSCO, currently 21exchanges / exchange commissions refer to GRI in their policy or reporting guidance:

18 GRI s critical role in the global transition Continued GRI aligned with other relevant standards / guidance (OECD, UNGC, IRIS, etc) Materiality focus (report on what matters where is matters limiting costs of reporting and increasing focus) Multi-stakeholder approach Digital Reporting Alliance use of XBRL taxonomy Reporting as an enabler of international trade Multilateral financial institutions considering reporting by beneficiaries

19 Investors seek ESG data and how GRI has been helping Investors represent a key constituency for GRI to engage with (on governance bodies, through projects, etc) Financial services providers GRI is the basis for indexes and analytics tools Investors confirm GRI reporting is investor relevant Training module for investors on how to use reported data 3-year research program into the needs of investors (with RobecoSAM) GRI reporting enables investors to understand the impact and outcomes of their investment decisions and their contribution to sustainable development

20 GRI reporting in practice Reporting to measure progress towards SDGs GRI reporting focuses on capturing impacts and outcomes = progress towards sustainable development Gender equality Water Job creation SCP: UPTAKE OF SUSTAINABILITY REPORTING the actual practice of reporting contributes to target 12.6

21 GRI reporting A proxy for the private sector s contribution to the SDGs

22 The SDG Compass Objective and partnership Guide companies how they can align their strategies, measure and manage their contributions to the SDGs A written guide and two online tool Partnership

23 The SDG Compass Inventory of business indicators

24 UNGC & GRI partner to make SDG reporting: More relevant - Relevant indicators Easier to understand - Guidance More simple to execute - Alignment reporting frameworks Accessible to all users - Aggregation data

25 Q&A

26 Standards Pioneers An exclusive online learning program for the GOLD Community Transitioning to the GRI Standards within a supportive, interactive setting Demonstrating leadership in reporting within an organization's location, industry and sector Connecting with others in sustainability reporting Better reporting with the new GRI Standards

27 Thank you GRI Barbara Strozzilaan HN Amsterdam The Netherlands Amsterdam New York Beijing Sydney New Delhi Johannesburg Bogotá São Paulo