Finance

and governance (ESG) considerations. Considering the environmental costs attributable to business and human activity – estimated at more than US$ 6 trillion in 2008 – much more transparency is needed. Scaling up resources for investment adhering to ESG principles is urgent and will require innovation and leadership by business and industry, collective action and public-private approaches as well as supportive regulatory frameworks.

5. The role of the public sector is indispensable in freeing up the flow of private finance

towards a green economy. Governments should involve the private sector in establishing clear, stable and coherent policy and regulatory frameworks to facilitate the integration of ESG issues into financial and investment decisions. In addition, governments and multilateral financial institutions should use their own resources to leverage financial flows from the private sector and direct them towards green economic opportunities.

6. Public finance is important for triggering a green economic transformation, even if public

resources are significantly smaller than those of private markets. The role of public development finance institutions (DFIs) in developed and developing countries in supporting the transition to a green economy could be strengthened further. Development Finance Institutions can adopt the goal of supporting development of the green economy, allocate significant proportions of their new lending towards financing green economy transition projects and link it to specific targets such as reduction in greenhouse gas (GHG) emissions, access to water and sanitation, biodiversity promotion and poverty alleviation. Policies can be designed to improve the “green efficiency” of their portfolios, for example, by examining the carbon and ecological footprints of their investment portfolios. In addition, DFIs can jointly define protocols for green due diligence, as well as standards and goals for sectors in which they have a major influence, such as transport, energy and municipal finance.

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