frameworks that would better integrate environmental, social, and governance issues in investment decisions and financial policy making. In addition, governments and multilateral financial institutions should use their own resources to leverage the financial flows from the private sector and direct them towards the fledgling green economic opportunities.
In the lead up to the Rio+ 20 Earth Summit in Brazil in 2012, there is a need to establish clear and workable frameworks, including regulation where necessary, to rebalance the risk/reward equation for financial and investment practitioners in favour of green investment. It is clear that across banking, investment and insurance
– the core activities of the world’s financial system – significant changes in philosophy, culture, strategy and approach, notably the overwhelming dominance of “short-termism”, will be required if capital and finance are to be reallocated to accelerate the emergence of a green economy. At the same time, fundamental aspects of international accounting systems and capital market disciplines, as well as our understanding of fiduciary responsibility in investment policy making and investment decision making, will need to evolve to fully integrate a broader range of ESG factors than takes place today. Without these changes, the pricing signals and incentives that could support the transition to a green economy will remain weak.