Finance

outcome of this, for example, is that in January 2010, the US SEC issued interpretive guidance on existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change. The following areas are examples of where climate change may trigger disclosure requirements::

■ Impact of legislation and regulation (US SEC 2010): When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic;

■ Impact of international accords: A company should consider and disclose, when material, the risks or effects on its business of international accords and treaties relating to climate change;

■ Indirect consequences of regulation or business trends: Legal, technological, political, and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant GHG emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends; and

■ Physical impacts of climate change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.

Development finance institutions Providing long-term public funding at home and abroad, Development Finance Institutions (DFIs) can play a significant role in supporting key elements of the emerging green economy. Issues such as climate change, energy security, and food security were a key consideration in the decision of shareholder governments to provide significant capital increases to the key multilateral development banks in 2010. DFI’s include:

■ Multilateral DFIs such as the World Bank, the IFC, the Inter-American Development Bank, the ADB, the African Development Bank, the EBRD, and the EIB, which in 2009 were reported to have committed US$ 168 billion (World Bank 2010b);

■ Bilateral DFIs, such as KFW group, which is German government-owned, with two subsidiaries focused on international development finance; AFD, a French

government-owned bank focused on developing and emerging countries and the French Overseas Communities; FMO, an entrepreneurial development bank founded by the Dutch government, targeting the private sector in developing countries; CDC, a UK government- owned institution, providing investment capital for business in particularly Sub-Saharan Africa and South Asia; and the Japan Bank for International Cooperation/ Japan International Cooperation Agency; and

■ National DFIs such as the Development Bank of Southern Africa, a South African government-owned bank focused on infrastructure development in South Africa and its sub-region; the Brazilian Development Bank, which is government-owned and finances development in Brazil and expansion of national companies abroad; the Caisse des Dépôts group, a public investor supporting the economic development of France; and the Overseas Private Investment Corporation, which is US government-owned and supports US business at home and abroad.

Some of these institutions belong to more than one category. For example, the KfW is both a major domestic financial institution and a strong international development bank. Within this group of banks, many provide loans, both concessional and non-concessional, to governments only. But a growing number fund sub- regional entities, state-owned corporations, and private sector businesses.

These Foreign Direct Investments (FDI) play a critical role in funding macroeconomic policies, sectoral policies, major infrastructure projects, and private sector development. Their contribution to greening national economies is already significant. They fund major sectors such as water, renewable energy, forestry, and agriculture. FDIs have been instrumental in mainstreaming

microfinance and supporting the

development of private industries in risky green sectors at early stages of development. But their role could be strengthened further, taking advantage of the prominent position they occupy in the funding of domestic investment programmes. Steps in this direction would include better identification of green economy aspects in their strategic targets, greater share of their activities devoted to these aspects, better measurement and reporting methodologies, improved cooperation among themselves, and sharing of best practices.

Governments are in a position to officially task these institutions to support green economy development, backed by concrete goals and targets. Carbon emissions reduction, access to water and sanitation, biodiversity promotion, etc., could become official goals for FDIs, in addition to poverty alleviation (UNDP 2007/2008) and infrastructure financing.

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