Since the Paris Agreement
on climate change was adopted in 2015 and with less than twelve years left to achieve the Sustainable Development Goals (SDGs), mobilizing action is urgent, and no more so than in the finance sector. To help make this happen, the Swedish government, together with the Stockholm Environment Institute (SEI) and the Stockholm School of Economics, launched the Stockholm Sustainable Finance Centre (SSFC) in December 2017, a ‘Silicon Valley’ for research, innovation and education on sustainable finance.
The implementation of the Paris Agreement
and the SDGs is expected to require tens of trillions of dollars
of investments in sustainable infrastructure over the next two decades. It is estimated that two thirds of this will be in developing countries. Investors and financial institutions have a crucial role to play in shifting the global economy to a low-carbon, sustainable path, the only viable path for the future.
To achieve this transformation, while maintaining growth, boosting productivity and competitiveness, we need to reboot the financial system and refocus it on sustainable investments. The ultimate goal is not just to shift existing financial markets towards green investments, but to direct significant new capital flows towards projects that transform the lives of the most vulnerable.
Yet sustainable finance is still in its infancy. Less than 1% of global bonds are green, and less than 1% of the holdings by global institutional investors are green infrastructure assets. Options to address some of the challenges to scale up green finance are emerging fast, as highlighted by the latest G20 Green Finance Synthesis Report. There is also momentum to promote voluntary principles for green finance, develop green bond guidelines, adopt environmental disclosure requirements, and strongly encourage the sharing of knowledge and best practices.
The Centre will carry out research into the risks and opportunities of sustainable finance, developing an evidence base for financial institutions and policy makers to maximise returns for investors and for sustainable development. It will work closely with financial stakeholders to identify solutions that shift capital allocation to support the transition to sustainable societies, particularly in developing countries. It will work to improve and expand existing solutions and help develop nascent ideas, including exploring the potential of green fintech solutions.