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Greening the Financial System – a SIFMA cohosted Forum

“Greening the Financial System – Enhancing Competitiveness Through Economic Development” – a SIFMA cohosted Forum.

Key Takeaways

Thursday, April 20, 2017 

  • The political environment, and the role of policymakers in the growth of the green finance industry, was a frequent topic of discussion at the forum. Panelists called on policymakers at the national level, as well as in international institutions such as the G20, to encourage the growth of the industry. Panelists also praised the steps taken by financial centers like Singapore and London to encourage the adoption of green financial products through various incentives and expressed support for future policy experimentation.
  • However, panelists qualified their support for policymaker action in the green finance industry, and indicated a preference for the private sector to take the lead in developing green finance. Many panelists also urged the government to not make direct investments in green assets to boost the industry and instead help create a framework for private actor participation.
  • Ratings on financial products, both green and otherwise, were discussed as a possible mechanism for the industry to encourage the spread of green finance. Participants generally agreed that ratings on the environmental impact of the activities underlying financial products would raise awareness about green financial products and encourage demand for them from investors.
  • Panelists discussed disclosures at length, particularly how changes to financial disclosures – to require information about the environmental impact of firm activities – could encourage the growth of the green finance industry.
  •  Panelists agreed that there is notable and growing demand from institutional investors for “green” financial assets. However, demand is far lower from retail investors, and panelists urged the industry to explore ways to boost their demand for green assets.
  • The panel also discussed ways to scale up the current relatively small number of green bonds (green bonds currently account for just 1/120  of all new bond issuance). Several participants argued for the need to build a “learning platform” that large green finance market participants could use to teach smaller participants about green finance.
  • Panelists discussed the importance of raising the profile of green finance within firms and within international fora, such as the G20. Several participants discussed the importance of building internal knowledge within firms of green finance, and making environmental issues a higher priority in executive searches. Panelists also argued that environmental issues and green financial products should be a higher priority in industry discussions with policymakers at all levels of government.