Moving to a sustainable world requires money, and lots of it. Trillions, not billions, according to the World Bank. A new international ISO committee has just been formed to take sustainable finance to another level.
Adapting to climate change and building a more equitable, sustainable world will require significant investment – around USD 90 trillion worth by 20301) for infrastructure alone. While much investment in green projects and “sustainable” solutions is already taking place, there needs to be more. Consistency in what sustainable finance really is and how it is put in place will drive confidence and uptake in the market, as well as encourage new initiatives and actions.
A new ISO technical committee, ISO/TC 322, Sustainable finance, aims to foster a sustainable investment market through the development of new International Standards. The first project for the committee will be to develop a framework for sustainable finance, which will consolidate concepts that exist and agree common terminology.
Mike Henigan, Secretary of the new committee, said there are already standards for governance, finance and sustainable development as well as on related topics like green bonds, but there is nothing holistically covering sustainable finance.
“Our aim is to mainstream sustainable finance, to make it more accessible and more effective for the industry and investors everywhere, thus enabling the alignment of the global financial system with the United Nations Sustainable Development Goals,” he said.
“This will involve bringing together the expertise on existing standards, harmonizing and clarifying what sustainable finance really is, and providing common terminology and international best practice and guidelines on putting processes in place.
“The initial framework will provide a platform from which organizations involved in sustainable investment can develop their products further and enable more and more players to enter the market,” he concluded.
Future work by the committee will consider the integration of sustainability into financial decision making, services and products; investment decisions that achieve good social outcomes in addition to financial returns; green finance, which combines “climate finance”, in support of concepts such as clean energy, with broader environmental and conservation finance; and investment around specific types of projects such as energy efficiency programmes and sustainable cities.
The secretariat of ISO/TC 322, Sustainable finance, is held by BSI, ISO’s member for the United Kingdom.
1) The Sustainable Infrastructure Imperative, The New Climate Economy Report, World Bank 2016