Why do we need a Sustainable Finance Policy Navigator (SF Navigator)?
The challenge to achieving the targets of the Paris Agreement and the United Nations Sustainable Development Goals (UN SDGs) is enormous – all economic sectors around the globe need to transform the way of creating welfare for society. This maxim applies to the financial sector and the real economy alike and results in the need for new rules, business models, innovation and incentives. Both public sector institutions and private actors play key roles in “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” (Paris Agreement Article 2.1.c) and aligning financial flows with the UN SDGs.
In the recent years, new sustainable finance strategies and tools have been developed on an international, national and regional level such as the EU Action Plan on Financing Sustainable Growth. These national and regional policy instruments and regulations are often fragmented and lack a holistic and systematic approach to achieve the structural transformations of the national economic and financial system necessary. This is why Frankfurt School and GIZ have jointly developed the SF Navigator. The creation of sustainable financial systems is a complex multi-stakeholder and multi-level action task. This requires a well-structured comprehensive yet country-tailored and flexible approach to involve public and private stakeholders in a most efficient way.
Please find here the SF Navigator Report.
In cooperation with:
Scope of the SF Navigator
Fields of action of the SF Navigator
- Awareness raising and agenda setting
- Data, standardization and disclosure
- Prudential requirements and risk management
- Market support instruments
- Leading by example
- Capacity building
Actor groups of the SF Navigator
- Central banks, financial Regulators, and supervisory authorities
- Public financial institutions and public agencies
- Public-private actors and initiatives
- Civil Society and academia
The SF Navigator aims to provide a well-structured, comprehensive but flexible answer to this challenge. It is a comprehensive guidance tool to assist developing and emerging countries in increasing the sustainability in their financial system based. The SF Navigator can be used to lay the foundation for a strategic national or institution-specific sustainable finance strategy and action plan, and support public actors in charge of sustainable finance to strengthen their positions and build alliances within national and international sustainable finance initiatives and forums.
The SF Navigator structures policy and regulatory action on sustainable finance by groups of actors groups and broad action areas, resulting in a flexible menu of actions. The menu of actions is a comprehensive list of potential measures available to the key actors involved in the transformation of the financial system. The SF Navigator can support countries in their sustainable finance efforts through advisory work and technical assistance (TA) by identifying gaps in the existing framework and establishing an enabling environment in the respective countries.
How does it work?
The SF Navigator is output- and needs-oriented. Country ownership in the development and implementation of actions is at the core of the SF Navigator philosophy. The SF Navigator is a diagnostic tool that helps national governments, regulators, and other public authorities take stock of and analyze existing sustainable finance policies, regulations and sector practices; assess gaps and constraints in the policy and regulatory landscape; and identify opportunities to leverage sustainable investments more effectively. The SF Navigator will steer discussions in a structured way so that stakeholders are enabled to have a joint platform for interaction. It will allow the respective actors to position themselves more easily in the international sustainable finance context, helping the financial sector to gain a competitive edge. When applying the SF Navigator, it is possible to develop actions for a single actor group (e.g. through an action plan for an authority) or to reflect several / all actor groups (e.g. in a national sustainable finance roadmap). As an example, for the public actor group “Banking supervisory authority” the action “Provision of a comprehensive data basis on green lending” could be developed under the field of action “Data, standardization and disclosure” (see graphic below).
Sharing good practices
The applicability of the SF Navigator benefits significantly from one of its key components: lessons learnt from existing good practices – successful and innovative examples of the different fields of action included in the SF Navigator. Good practices and relevant publications / literature from around the world have been collected along the dimensions of the actors groups and the different fields of action. This ensures that the advice and guidance based on the SF Navigator is not only derived from theoretical frameworks and recommendations, but stem considerably from practical international experience. Among the collected good practices from around the world, you find a roadmap for aligning the financial sector with sustainable development in Morocco and climate stress tests conducted by the Dutch Central Bank DNB.
Further knowledge and information on SF policy action can be found at (selection):
- The Green Finance Measures Database (GFMD) launched in 2019, and the Green Finance Platform are part of the Green Growth Knowledge Platform (GGKP) hosted by UNEP, UNIDO, OECD and GGGI. It comprises several hundred good practice example of green and sustainable finance policy measures: https://greenfinanceplatform.org/financial-measures/browse
- The Network of Central Banks and Supervisors for Greening the Financial System (NGFS) was launched in 2017 and has grown to 55 members in early 2020. The NGFS develops and publishes method for central bank and regulators alignment to climate change: https://www.ngfs.net/en
- A comparative analysis on sustainable finance regulation from the civil society perspective is provided by the FS-UNEP Centre’s “Finance fit for Paris (3fP)”-Tracker (https://www.3fp-tracker.com/) for several EU countries.