Quiet financial revolution nurtures green growth

Internationally, the burgeoning green bond market is predicted to surpass $150 billion in market value before the year is out. A number of credit rating agencies have embedded climate risks in their ratings. And certain regulators and stock exchanges are providing information on sustainable development information to investors and savers.

Green finance is becoming a source of competitiveness. Leading financial centers such as Hong Kong, Paris, Zurich and London are jockeying to position themselves as the world's hub for green finance.

And under China's G20 Presidency, this quiet revolution is becoming mainstream, as green finance has, for the first time, become a topic considered by the world's leading finance ministers and central bank governors. China and the United Kingdom are co-chairing this initiative, and are leading by example.

Zhou Xiaochuan, governor of the People's Bank of China, has presided over the creation of China's Green Finance Committee. This committee is implementing policy, regulatory and institutional measures, developed with international cooperation coordinated by the UNEP, to green China's financial system. Zhou has said that "establishing a green finance system has become a national strategy", and it is now enshrined in China's 13th Five-Year Plan (2016-20).

Mark Carney, governor of the Bank of England, has overseen a review of the risks posed by climate to the UK insurance sector, as well as overseeing a task force on climate-related disclosure in his role as Chair of the G20's Financial Stability Board. He has made his view clear, stating "there is a need to reset the financial system", if it is to play a role in addressing climate change and broader sustainable development challenges.

The UNEP remains deeply engaged in advancing such a reset and we will release our second global report on progress made in aligning the financial system with sustainable development at the forthcoming International Monetary Fund annual meetings, presenting an early framework for measuring progress and with a focus on the role of financial technology.

We are part way through a profound global economic transition. From energy to transport to agriculture to manufacturing, change is happening at an incredible pace. But the threat of climate change and the urgency of development means we need to quicken this pace. Global finance systems are key to these changes, and the G20 can and must continue to drive such changes. An ambitious direction was set last year in Paris and New York. Now we need to put this ambition at the heart of the financial system.

The author is executive director of the United Nations Environment Programme.