Financial market participants are becoming increasingly aware of the urgent need to redesign the financial system in a way that works for the planet and its people. The cost of maintaining the status quo is increasingly clear. The pandemic has further exposed the economy’s vulnerability to non-financial sources of risk. And while policy-makers have taken steps to shield financial markets from the worst, the misalignment between markets and the real economy is unsustainable.
Central banks broadly recognise that sustainability risks are economic and financial threats. They are moving to design measures to address these, including climate stress tests, sustainable reserves management and green monetary policies. Similarly, investors are looking to measure and manage the impact of sustainability factors on their portfolios and vice versa. Capital markets authorities, stock exchanges and bond issuers are working to create the supply to match this growing demand by developing and scaling up sustainable financial instruments. Developments in data technology and analytics are enabling better measurement by ratings agencies and data providers, and facilitating the integration of nonfinancial factors in financial decision-making.
Key contributors to this inaugural edition of the SPI Journal include:
– Luiz Pereira da Silva, Deputy General Manager at the Bank for International Settlements
– Ma Jun, Chairman of the Green Finance Committee at the China Society for Finance and Banking
– Fabio Natalucci, Deputy Director of the Monetary and Capital Markets Department at the International Monetary Fund
– Jörg Kukies, State Secretary of Germany’s Federal Ministry of Finance, and Tammo Diemer, Member of the Executive Board of the German Federal Finance Agency