SWITCH To Green through green investments and access

SWITCH To Green through green investments and access to finance CHANGING FINANCE FINANCING CHANGE UNEP Finance Initiative SWITCH To Green Coordination Meeting October 2017 1

UN Environment‘s Finance Initiative A partnership between the United Nations and the finance industry since 1992 Regional and Global Roundtables Europe: 16 -18 October 2017 + December 2018

Where are we now? The state of sustainable finance: Glass half-full Leadership momentum • First products (e. g. green bonds) and strategies are emerging Pockets of sustainability considerations within institutions • Environmental and social risk management systems introduced • Reporting on social and environmental risks and impacts Well established sustainable finance frameworks • PRI (Principles for Responsible Investment) and PSI (Principles for Sustainable Insurance) • Positive Impact Finance Principles Standardization of sustainable finance practices taking shape • Standards & tools being developed – largely to manage ESG (environmental, social and governance) risks Policy engagements starting to have influence (from around 2012 -) • Policy makers increasingly engaging with private finance on sustainable development • Some policies & regulations designed to drive sustainable finance

Boosting green investments and access to finance How can UNEP FI contribute? Enabling policies 1. Convening dialogues between public and private stakeholders on enabling policies 2. Creating critical mass of financial institutions supporting SWITCH to Green businesses & industries 3. Supporting the development of SWITCH to Green tailored financial products Critical mass of FIs Boost green investments & access to finance

1. Convening dialogues between public and private stakeholders on enabling policies Strengthening feedback mechanisms between state and non-state actors Example 1 – Connect state and non-state actors UNEP FI holds Latin America & the Caribbean Regional Roundtable for Sustainable Finance, Buenos Aires, September 2017. Connects regulators, policy-makers and development banks with private sector banking, insurance and investment companies from across the region. Supported uptake of • Peer-to-peer learning • Dialogue with non-state actors • Best practice & inspiration • Contacts & networks • Peer-to-peer learning • Dialogue with state actors Argentinian financial institutions Latin American state actors Latin American Financial Institutions • Best practice & inspiration • Contacts & networks

1. Convening dialogues between public and private stakeholders on enabling policies Example 2 – Market leaders create confidence among policy makers UNEP FI holds high-level launch event on Positive Impact Principles in Morocco, July 2017. Group Executive Managing Director, BMCE Bank of Africa and other UNEP FI members demonstrated how private finance leaders are already supporting SDGs in Africa and offered a vision for scaling this up to the market level. The message was much welcomed and supported by key Moroccan public authorities such as CEO, Casablanca Finance City Authority and Chairman, Economic, Social and Environmental Enabling Policy Private Sector Leadership Strengthen enabling policies Market transformation

2. Creating critical mass of financial institutions supporting SWITCH 7

2. Creating critical mass of financial institutions supporting SWITCH Example of UNEP FI’s partnership & network UNEP FI Supporting Institutions in Africa & Middle East and Asia • • • Association CAREDAS (Senegal) (Insurance) Association of Banks in Jordan (Bank) Banking Association of South Africa (Bank) South African Insurance Association (Insurance) Union of Arab Banks (Regional) (Bank) University of Cape Town, Centre of Criminology (South Africa) (Insurance) Association of Insurers and Reinsurers of Developing Countries (Philippines) (Insurance) Insurance Commission of the Philippines (Insurance) Insurance Institute for Asia & the Pacific (Philippines) Insurance Institute of India (Insurance) Philippine Insurers & Reinsurers Association (Insurance) Philippine Life Insurance Association (Insurance) 8

2. Creating critical mass of financial institutions supporting SWITCH Example of UNEP FI’s norm setting & capacity building Aim: Helping practitioners integrate environmental and social issues across their institutions. Guidance across departments on: • leadership * sustainability * risk * legal * corporate banking * retail banking * communications * human resources Environmental & Social Risk Analysis (ESRA training) Train banking practitioners to identify, analyse and manage E&S risks in lending and investment activities Climate change training course Risks and opportunities to mobilise climate finance (GCF) 9

2. Creating critical mass of financial institutions supporting SWITCH Example of UNEP FI’s support for leadership action Insurance industry statement on sustainable marine insurance § World’s 1 st insurance industry statement on sustainable marine insurance --- with a focus on illegal, unreported and unregulated (IUU) fishing --- also known as pirate fishing § To be launched at Our Ocean conference (5 -6 Oct 2017, Malta) § Leading insurers --- including some of the world's largest marine insurers ---- have signed the Statement. 10

2. Creating critical mass of financial institutions supporting SWITCH Example of UNEP FI’s methodologies & tool development Stress Testing loan Portfolios for Drought Scenarios (April 2017) Analytical framework assessing impact of environmental shocks on corporate loan portfolios in Brazil, China, Mexico and USA. Working with banks to stress test portfolios for drought risk to provide business case for enhancing consideration of water management by corporate clients in lending portfolios.

3. Supporting the development of SWITCH to Green tailored financial products POSITIVE IMPACT INITIATIVE A new business and financing paradigm for the achievement of the Sustainable Development Goals The potential for scale through impact-based business models and the role of the finance sector ECOSYSTEMS Removing Deforestation from commodity supply chains (Sept 2017 – 2021) Part of a large GEF project with UNDP, IFC, WWF and others to develop approaches to remove deforestation from agricultural commodity supply chains (beef, palm oil, soy) in Indonesia, Liberia, Brazil and Paraguay. Implications and roles for the financial transactions. Business models for REDD+ finance (Jan – Dec 2017) Business models to reduce deforestation with focus on Ivory Coast, Zambia and Latin American countries. The Restoration Initiative (2018 – 2022) GEF project with IUCN and FAO to restore forest landscapes and ecosystems. UNEP FI leading Finance sector component. Possible country implementation: Cameroon, Central African Republic, Democratic Republic of Congo, Guinea-Bissau, Kenya, Sao Tome & Principe, Tanzania etc.