Market Regulators for Development

Network of Regulators for Sustainable Development (REDES)

Sustainable finance can be broadly understood as financing, and institutional and market arrangements to the achievement of strong, sustainable, balanced and inclusive growth. The Sustainable Development Goals (SDGs) are usually used as a framework to determine it.

A proper framework for sustainable finance development may also improve the stability and efficiency of the financial markets by adequately addressing risks as well as market failures such as externalities. Read More


 

Scope of Activities

Intersectoral Dialogue

Including regional workshops and other initiatives to create awareness and identifying the main challenges regarding ESG and climate risks within the financial sector.

Technical Support

To the beneficiary institutions providing insights, criteria, recommendations, and best practices on public policies aimed to address and mitigate ESG risks and its impact on the financial system, as well as to foster sustainable finance.

Training and Capacity Building

Workshops and other activities to create awareness and understanding of ESG issues and develop sustainability-related analytical capabilities.

Technical Studies

Including frontier knowledge and understanding of the current worldwide initiatives and analysis for identification of best practices on ESG risks and policies, reorganization, or applicability of technologies, among others.


 

Where it is implemented

REDES will support LAC central banks, financial regulators, supervisors, and any other governmental agencies in two areas. First, strengthening institutional capacity, and, second, disseminating and sharing knowledge with the overall objective of promoting the development of country-level strategies for a sustainable finance market, regulatory, and supervisory practices.


 

Why Sustainable Regulation?

The financial sector increasingly acknowledges environmental and social as significant risk factors. ESG risks can hurt the performance of financial corporations due to exposures on credit, legal, market, operational and reputational risks. Sustainable growth requires public policy frameworks and sustainable regulations, and supervision, conducive to providing certainty for investors and industry. This also means innovative financial instruments and tools to support financial risks assessment stemming from this new landscape.


Sustainable regulation allows overcoming barriers to sustainable finance:

Improving the awarenessImproving the awareness and knowledge of regulators and financial supervisors to understand, assess, monitor, and supervise ESG and climate risks within the financial sector.
Enhancing sustainability relatedEnhancing sustainability-related analytical capabilities for financial authorities.
Incorporating ESGIncorporating ESG and climate-related risks into financial risk assessment, regulation, and supervision.


Creating transparencyCreating transparency and a long term mindset within the financial sector regarding ESG issues.
Aligning public policiesAligning public policies and financial regulations to a long-term strategy to promote and mobilize mainstream sustainable finance.

 

Partners on the Ground


This Initiative is being promoted by the IDB with support from the Association of Banking Supervisors of the Americas ASBA and the Network of Central Banks and Financial Supervisors for Greening the Financial System, NGFS.


 
Resources
  • Stay updated on the latest trends of Green Finance

Third TCFD Status Report Shows Progress & Highlights Need for Greater Climate-Related Disclosures and Transparency

The TCFD also issues implementation guidance and opens public consultation period to solicit input on forward-looking metrics The Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial Stability Board (FSB), published its 2020 Status Report today. Reviewing 1,700 companies’ reports using artificial intelligence technology, the Task Force found that disclosure of climate-related financial information aligned with the TCFD recommendations has steadily increased since the recommendations were published in 2017. The largest increases relate to companies disclosing how they identify, assess, and manage climate-related risk. Industries considered most exposed to material climate risk have led with the highest levels of TCFD disclosure. To date, more than 1,500 organizations have expressed their support for the TCFD recommendations, representing an increase of over 85% since the 2019 status report. However, despite the significant momentum, the 2020 Status Report highlights the continuing need for progress in improving levels of TCFD-aligned disclosures given the urgent demand for consistency and comparability in reporting. In particular, disclosure of the potential financial impact of climate change on companies’ businesses and strategies remains low. Key findings from the Task Force’s review of company disclosures, insights from users, and other research include: • Energy companies and materials and buildings companies are leading on disclosure, with an average level of TCFD-aligned disclosures of 40% for energy companies and 30% for materials and buildings companies in fiscal year 2019. • Expert users of disclosure identified the impact of climate change on a company’s business and strategy as the “most useful” information for financial decision-making. • Asset manager and asset owner reporting to their clients and beneficiaries is likely insufficient. • The report also provides an illustrative ‘roadmap’ for preparers by highlighting insights from expert users on which information is most useful for decision making To support companies’ implementation efforts, the Task Force is issuing two guidance documents with the release of this status report: • Guidance on conducting climate-related scenario analysis; and • Guidance on integrating climate-related risks into existing risk management processes and disclosing those processes. The Task Force also seeks feedback on its consultation on decision-useful, forward-looking metrics for the financial sector. Publication of the consultation document today begins a 90-day public consultation period, ending January 27, 2021. The Task Force will deliver its next status report to the FSB in September 2021. DOWNLOAD REPORT HERE


Events


Date : 10/07/2020 - 10/15/2020



 

Visit other Initiatives

  • Market Regulators For Development
  • Bioeconomy
  • Private Sector
  • Green Social and Thematic Bonds
  • Green Finance
  • Climate Risk
  • Blue Economy
  • Green Bond Transparency Platform
  • LAB

This post is also available in: Spanish Portuguese (Brazil)

X