The sustainable investment forum 2020 was an important event that brought together stakeholders to discuss the latest trends and developments in sustainable investing. With climate change and ESG issues taking center stage, the forum highlighted the growth of sustainable investing and the policy and regulatory measures needed to channel more capital towards sustainability. Some of the key takeaways included the mainstreaming of ESG into investment decisions, growth in sustainable investments assets, importance of data and standards, role of policy in shaping the market and the need for collective action. The forum underscored the momentum towards sustainable finance and provided a platform for sharing ideas and experiences to accelerate the transition.
Growing prominence of ESG integration and sustainable investments
The forum highlighted the growing commitment among investors and financial institutions to integrate ESG factors and sustainability considerations into their investment approach. Sustainable investment assets under management are witnessing rapid growth globally, rising 34% from 2016 to 2020. More investors are realizing the investment risks posed by issues like climate change and social inequalities, and the investment opportunities presented by the transition to a sustainable economy. This has made ESG integration more mainstream. The EU has been at the forefront of this shift with supportive policy measures.
Data, standards and transparency crucial to channel capital
For investors to efficiently allocate capital towards sustainable objectives, access to consistent, reliable and comparable ESG data is crucial. The lack of standardized sustainable finance definitions and metrics has made it harder for investors to identify sustainable assets and incorporate material ESG factors. The forum highlighted the need to develop globally accepted sustainability reporting standards and taxonomies to enable capital flows towards sustainability. The EU taxonomy to classify sustainable economic activities is an important step.
Policies shaping the sustainable finance landscape
The forum emphasized the critical role policymakers have in creating an enabling environment for sustainable finance and investments to thrive. Many jurisdictions like the EU and UK have introduced regulations and frameworks to promote transparency on ESG risks, align investor duties to sustainability factors and create markets for green financial products. While global coordination on standards is important, continued policy action by governments to incentivize the integration of sustainability factors into the financial system is vital.
Collective action is key to systems transformation
The scale of the climate crisis and sustainable development challenges require coordinated efforts by all actors in the financial system. The forum highlighted the power of collaborative platforms like Climate Action 100+ that enable investors and corporates to engage towards reducing emissions. But beyond engagements, investors also need to actively re-allocate capital away from unsustainable activities. More broadly, achieving the Paris Agreement goals and SDGs would necessitate transformative policies by governments.
The sustainable investment forum 2020 provided key insights into the state of play and future direction of sustainable finance. It highlighted the important strides made with more investors integrating ESG but also underscored the urgent need for bridging data gaps, aligning policies with sustainable objectives and mobilizing collective action by the entire financial system. Accelerating sustainable finance is crucial to meeting global climate and development goals.