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1、 1 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group G 2 0 S U S T A I N A B L E F I N A N C E W O R K I N G G R O U P 2022 G20 SUST AINABLE FINANCE REPORT 2 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group TABLE OF CONTENT E

2、xecutive Summary-4 Developing a Framework for Transition Finance.4 Improving the Credibility of Private Sector Financial Institution Commitments.9 Scaling up Sustainable Finance Instruments with a Focus on Improving Accessibility and Affordability.15 Reporting on progress on the G20 Sustainable Fina

3、nce Roadmap&2021 recommendations.23 Discussing policy levers that incentivize financing and investment to support the transition.25 Chapter I-Developing a Framework for Transition Finance-26 Pillar 1.Identification of Transitional Activities and Investments.28 Pillar 2.Reporting of Information on Tr

4、ansition Activities and Investments 31 Pillar 3.Transition-Related Financial Instruments.33 Pillar 4.Designing Policy Measures.34 Pillar 5.Assessing and Mitigating Negative Social and Economic Impact of Transition activities and Investments.37 Chapter II-Improving the Credibility of Private Sector F

5、inancial Institution Commitments-41 1.Background.41 2.Review of market practices on climate commitments.43 3.Capacity constraints and challenges.45 4.Recommendations to enhance commitment credibility.47 5.Recommendations to progressively enhance accountability of financial institutions that have mad

6、e voluntary commitments.50 3 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Chapter III-Scaling up Sustainable Finance Instruments with a Focus on Improving Accessibility and Affordability-54 1.Background.54 2.Barriers and Challenges.55 3.Emerging options for

7、enhancing affordability and accessibility of sustainable finance.57 4.Recommendations.63 Chapter IV Reporting on progress on the G20 Sustainable Finance Roadmap-68 Section 1:Reporting Progress on the SFWGs 2021 Priority Areas.69 Section 2:Reporting Progress on the SFWG G20 Roadmap.72 Annex for Chapt

8、er I-85 Annex for Chapter II-104 Annex for Chapter III-106 Annex:Discussing policy levers that incentivize financing and investment that support the transition-121 4 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Executive Summary This report summarizes the wo

9、rk of the Sustainable Finance Working Group(SFWG)in 2022.SFWG work has been anchored in the G20 Sustainable Finance Roadmap(the“Roadmap”)actions,endorsed as voluntary by G20 Leaders at the 2021 Rome Summit,and recognized earlier this year by the G20 FMCBGs as critical to the achievement of the 2030

10、Agenda for Sustainable Development in line with the UNFCCC and the Paris Agreement.Specifically,the report:tracks progress on the recommended actions in the Roadmap;describes the outcome of SFWG activities across three workstreams Developing a Framework for Transition Finance,Improving the Credibili

11、ty of Private Sector Financial Institution Commitments;Scaling up Sustainable Finance Instruments which includes high-level principles and voluntary recommendations;reports key takeaways from the forum on international policy levers for sustainable investment held in June 20221 Developing a Framewor

12、k for Transition Finance Despite the rapid growth the green and sustainable finance markets in the past years,efforts to support climate-aligned financing have mostly focused on“pure green”and near“pure green”activities,while support to the broader range of investments needed for the whole-of-econom

13、y climate transition,including transition activities and investments undertaken by GHG-intensive sectors and firms,has been limited,with some sectors finding it increasingly difficult to access bank loans and capital markets.An effective framework for transition finance can support this whole-of-eco

14、nomy transition,and can improve the ability of sectors or firms to gain access to financing to support their transition to net-zero emissions.This,in turn could help them mitigate the potential negative effects of a disorderly transition,such as climate-related transition risks,restricted access to

15、affordable and 1 https:/g20sfwg.org/wp-content/uploads/2022/07/Presidency-Summary-%E2%80%93-Forum-on-International-Policy-Levers-for-Sustainable-Investment-%E2%80%93-13-June-2022.pdf 5 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group reliable energy,unemployment

16、,and potential broader social impacts.An effective framework can also reduce the risks from“green and SDG washing”.Transition finance,as discussed in this report,refers to financial services supporting the whole-of-economy transition,in the context of the Sustainable Development Goals(SDGs),towards

17、lower and net-zero emissions and climate resilience,in a way aligned with the goals of the Paris Agreement.Against this background,the SFWG has developed a set of high-level principles on transition finance.This includes specific principles on the transition finance framework around the five pillars

18、 below,which are interrelated.1.Identification of transitional activities and investments Principle 1 Put in place either a taxonomy or a set of principles,or other approach to guide FIs and real economy firms to identify and understand what a transition activity or investment opportunity is and red

19、uce the identification barriers,costs and transition-washing risk,especially with respect to the potential of long-term GHG intensive lock-in.Principle 2 Help ensure that identification of transition activities or investment opportunities are based on transparent,credible,comparable,accountable,and

20、timebound climate objectives,as appropriate,such as those for climate resilience and/or GHG reduction(e.g.,carbon intensity,energy efficiency),and in line with the goals of the Paris Agreement.Principle 3 Be applicable to potential use cases at the project,entity,industry and aggregate(e.g.,portfoli

21、o,funds and indices)levels.Principle 4 Include clear recommendations around verifiability of transition activities or investments(e.g.,by providing guidance for transparency,benchmarking,or independent 6 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group verificat

22、ion),including their alignment with GHG pathways consistent with the goals of the Paris Agreement.Principle 5 Be dynamic reflecting and supporting evolving scientific,market and technological developments,policy environment,abatement cost curves,as well as developmental needs and priorities.Principl

23、e 6 Consider and include measures to facilitate an orderly,just and affordable transition,while avoiding or mitigating possible negative impacts on employment and affected households,communities,and other SDGs(including environment protection and biodiversity),or risks to energy security and price s

24、tability.Principle 7 Facilitate cross-border uses,as applicable,by ensuring comparability and interoperability of alignment approaches across jurisdictions considering the G20 high-level principles for developing alignment approaches of the G20 Sustainable Finance Roadmap(action 1).2.Reporting of in

25、formation on transition activities and investments Principle 8 Disclose up-to-date transition plans,with credible and ideally verifiable,comparable,science-based interim and long-term goals,and timelines for achievement(for example,technical pathways,fund raising and investment plans etc.).Principle

26、 9 Report on progress at regular and appropriately spaced time intervals,including overall mitigation and adaptation objectives,such as net-zero and interim targets that are supported by up-to-date and scientific methodologies,consistent with the goals of the Paris Agreement.Principle 10 Disclose cl

27、imate data including Scope 1 and Scope 2 GHG emissions data,and material Scope 3 data as it becomes possible.The disclosure of Scope 3 emissions data can 7 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group progress using a phased approach,as it becomes possible,r

28、eflecting progress on data availability and capacity.Firms should report on relevant approaches and policies for disclosure,such as the internal carbon price used,and the characteristics of carbon credits or carbon offsets used to meet the transition targets.Principle 11 Disclose corporate governanc

29、e arrangements that ensure such transition activities or plans will be implemented properly,including with respect to risk management systems and due diligence processes.Principle 12 Disclose methodologies used to measure transition progress and achievements,including,but not limited to,the metrics

30、and methods used to assess progress on climate objectives,such as emissions reductions,removals,recycling and reuse,and/or any benchmarks used therein(e.g.,carbon intensity)and the extent to which such methodologies align with internationally recognized scenarios.Principle 13 Disclose the use of pro

31、ceeds raised from transition finance instruments(for use of proceeds instruments)or the performance of KPIs/SPTs that are material to the fundraisers businesses(for general corporate purpose instruments such as sustainability-linked loans or bonds).3.Transition-related finance instruments Principle

32、14 the fundraiser should present a detailed and transparent,science-based transition plan that is aligned with the goals of the Paris Agreement and consistent with a credible alignment approach(a taxonomy-based approach,a principles-based approach,other alignment approach or a combination of them)to

33、 inform market participants on the ambition and focus of their transition efforts.8 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Principle 15 the fundraiser should adhere to the transition-related disclosure guidance or requirements,as outlined in the previo

34、us section and to all other applicable requirements in their jurisdiction(s),to help ensure the transparency of the transition activities,targets,metrics and KPIs,as well as implementation of any safeguard and correction measures,as appropriate.Principle 16 transition finance instruments could incor

35、porate built-in incentives/penalties,of sufficient magnitude,to encourage strong performance against GHG emission reduction targets and other climate-or sustainability-related performance targets(SPTs).4.Designing policy measures Principle 17 Policy makers could design appropriate policies,incentive

36、s and regulatory environments and work to ensure they are effective in improving the bankability of transition activities and crowding in more private sector investment,taking into account national circumstances and in the context of sustainable development and efforts to eradicate poverty.Authoriti

37、es should also consider providing forward guidance on the implementation of such policies to provide regulatory certainty to investors.Principle 18 IOs and MDBs could play a key role in providing technical assistance and long-term financing to countries,especially developing countries,in designing a

38、nd implementing suitable policy measures to support transition projects.Principle 19 International cooperation should be promoted to ensure transparency and understanding across approaches,as well as to exchange good practices and expertise.9 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sust

39、ainable Finance Working Group 5.Assessing and mitigating negative social and economic impacts Principle 20 Encourage fundraisers to assess and mitigate potential impacts of their transition plans or other strategies.In setting eligibility criteria and reporting framework for transition activities,au

40、thorities or FIs,where consistent with domestic mandates and local laws and regulations,should encourage the fundraiser(the company)to assess the potential socioeconomical implications of its transition plan,to be transparent about these implications and measures taken to mitigate negative impacts o

41、r highlight potential net positive impacts.Principle 21 Develop demonstration cases of just transition.Appropriate IOs,including the ILO,OECD,UNDP and MDBs,should work with the private sector in developing more concrete transition finance cases that explicitly incorporate“just”elements of transition

42、,including risk and impact measurement and reporting,and KPI design,and update the SFWG in future meetings.Principle 22 Strengthen the dialogue and cooperation between governmental agencies,employers and workers representatives,markets regulators,academia,civil society and private sector stakeholder

43、s to define a comprehensive strategy to mitigate negative economic and social implications.Improving the Credibility of Private Sector Financial Institution Commitments Financial institutions have an important complementary role to play in accelerating the whole-of-economy climate transition through

44、 their function of capital allocation,client advisory services and market infrastructure services.There has been a growing number of voluntary net-zero or 10 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group sustainability commitments by financial institutions,al

45、though many financial institutions in developing countries still need to build capacity before taking further commitments.The SFWG has begun work to strengthen the transparency and credibility of these voluntary commitments by financial institutions,by identifying recommended elements of a credible

46、net-zero commitment,and voluntary actions that financial institutions,international organizations,and jurisdictions can take to support these commitments,as consistent with existing legal frameworks.The SFWGs work is an important step forward to enhance comparability across institutions commitments,

47、to provide clarity on recommended elements of a credible net-zero commitments,and to advance efforts that will support credible voluntary net-zero commitments.The SFWG recognizes that voluntary commitments have been made mostly by FIs in developed countries,and that that emerging markets and develop

48、ing economies(EMDEs)may require additional technical assistance to further develop the capabilities to identify,set and track net-zero and other sustainability commitments from financial institutions.The SFWG makes the following voluntary recommendations to gradually enhance accountability of these

49、commitments.Recommendations to Enhance Commitment Credibility Recommendations for private sector financial institutions Recommendation 1 Apply commitments,where possible,to all operations,financing,products,services,and business lines,and be in-line with holding the increase in the global average te

50、mperature to well below 2 degrees Celsius above pre-industrial levels,and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels.Where possible,FIs should consider integrating voluntary net-zero commitments into their business strategy,engagement,polici

51、es,corporate governance,risk management,skills,and culture.Institutions should establish,disclose and 11 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group apply relevant strategies,policies and conditions,including policies to disclose,transition and phase out fi

52、nancing of unabated GHG-intensive activities/assets,or policies on the use of carbon credits.Institutions can work with appropriate actors to facilitate an orderly,just,and affordable transition FIs that have made voluntary net-zero commitments should also identify actual or potential adverse impact

53、s of transition and set policies to prevent and mitigate such impacts.FIs shall also cover scope 1 and 2 emissions,and,where data permits,material scope 3.Recommendation 2 Engage with clients to align practices with appropriate sectoral pathways and engage with client and portfolio companies to enco

54、urage and,if feasible,enable them to make voluntary net-zero commitments and implement them.Recommendation 3 Accompany end-date targets to achieve net-zero with science-based,time-bound interim targets,benchmarked against credible tools,pathways and frameworks,that demonstrate a feasible path toward

55、s net-zero.Institutions should consider including,(1)a thorough baseline analysis of current portfolio emissions,ideally performed at the time the commitment is made(within two years of making a net-zero commitment)and(2)adopt an emissions target to be achieved within a certain timeframe e.g.,a mid-

56、term five-year target.Commitments and targets should also be science-based and ideally verified by a third party.Recommendation 4 Use independent third-party verification/assurance(e.g.,by auditors,consultancies,NGOs or assurance companies),keeping in mind the domestic circumstances.Third-party veri

57、fication bodies 12 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group should be transparent in the methodology they use to verify information in transition plans.Recommendations for relevant authorities,international organizations and networks Recommendation 5 Rel

58、evant authorities and regulators in individual jurisdictions,and in accordance with country capacity,their own net-zero commitments,and domestic laws,could consider encouraging voluntary FI net-zero commitments,articulating how they will support and/or engage with voluntary FI net-zero commitments a

59、nd corporate net-zero transition plans in a manner consistent with their mandates and objectives,in addition to domestic sustainability reporting requirements.Relevant authorities can help the real economy transition by providing clarity on how they plan to achieve the goals of the Paris Agreement,a

60、s well as meeting their Nationally Determined Contributions.This could include implementing mitigation policies coherent with climate goals and establishing policy frameworks that address existing market failures and enable private sector financial flows.Recommendation 6 Relevant international organ

61、izations,MDBs,initiatives and networks should coordinate their efforts to support ambitious voluntary financial sector commitments,including by providing capacity-building services;supporting efforts to improve comparability,transparency,and broad-based access to tools,technologies and methodologies

62、(also suitable for developing countries);and offering platforms for knowledge and data sharing.International networks,NGOs and think tanks specialized in carbon accounting,science-based target setting,and scenario 13 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Gr

63、oup development should devote resources to facilitate uptake and use of tools.MDBs and other IOs could promote knowledge sharing and technical assistance programs to countries that request them.Recommendations to progressively Enhance Commitment Accountability of financial institutions that have mad

64、e voluntary commitments Recommendation 7 Provide publicly available,consistent and comparable information on metrics,scenarios,methods,and benchmarks used to set targets.FIs that have committed to a net-zero target should monitor and disclose a consistent,comparable,and reasonable range of metrics i

65、n a consistent and comparable way to assess progress in implementing net-zero strategy and priorities(e.g.,targets for GHG emissions or intensity reductions;support and scaling of climate solutions and sustainable finance;transparency on engagement strategies;portfolio alignment metrics such as impl

66、ied temperature rise,internal implementation,and where relevant,retirement of GHG-intensive assets).Information should be interpretable and supported by up-to-date science,with transparency on the methodology used and consistent with data availability over time.Recommendation 8 Report annually on in

67、stitutional progress and provide information on any gaps or challenges to meeting targets.Institutions that have voluntarily committed to a net-zero target should establish efficient processes for internal monitoring and for external reporting on progress and any possible corrections.FIs that have v

68、oluntarily committed to 14 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group a net-zero target should also commit to revisiting and,if appropriate,revising interim targets and pathways based on evolving market dynamics,technological developments,current policy en

69、vironment,and shifting abatement cost curves.These FIs should provide publicly available information that clearly explains any adjustments to interim targets and pathways.These FIs are encouraged to share implementation experiences and lessons learned,to encourage clear-eyed assessment of progress a

70、gainst targets.FIs can support efforts to track progress by engaging with relevant initiatives and providing transparent,credible,and comparable information at the FI level.Recommendation 9 Work together to encourage accountability,share lessons learnt,and address common challenges,including through

71、 joint initiatives of FIs that have made net zero commitments.FIs that have voluntarily committed to a net-zero target should learn from one another through discussion and share detail of tools,data,and methodologies used,as appropriate,to enhance comparability across FIs and suitability to local co

72、ntexts and considerations,and to enable and accelerate delivery on net-zero commitments.These initiatives should support comparability,which will advance efforts to track progress in the aggregate and drive further momentum and accountability.Recommendation 10 Governments and international organizat

73、ions and networks could,as appropriate and applicable,consider measures to enhance the accountability and comparability of financial sector net-zero commitments in a manner consistent with their 15 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group mandates and ob

74、jectives as well as local laws and regulations,recognizing the voluntary nature of such commitments.National authorities and regulators could consider,within their mandates,some form of progress monitoring on regulated FIs,encourage the use of comparable parameters to report on and monitor,support d

75、omestic or cross-border data platforms to serve both regulators and financial market participants.International organizations and networks could continue to work towards more comparable technical approaches,methodologies,and metrics for net-zero target-setting,progress tracking(including in aggregat

76、e)and implementation that consider international/regional regulatory developments and national contexts.Jurisdictions,international organizations and/or networks engaged in efforts to track progress of firms who have voluntarily committed to net-zero are encouraged to provide progress update to the

77、G20 Sustainable Finance Working Group.Scaling up Sustainable Finance Instruments with a Focus on Improving Accessibility and Affordability Achieving the goals of the Paris Agreement and the 2030 Agenda will require unprecedented mobilization of capital2 and global collaborative efforts to scale up s

78、ustainable finance markets,including by improving accessibility and affordability of sustainable finance,especially for developing economies and Small and Medium Enterprises(SMEs).The SFWG has developed a set of voluntary recommendations targeted at Multilateral Development Banks 2 OECD(2020),Global

79、 Outlook on Financing for Sustainable Development 2021:A New Way to Invest for People and Planet,OECD Publishing,Paris,https:/doi.org/10.1787/e3c30a9a-en 16 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group (MDBs),International Organizations(IOs),financial instit

80、utions,and country authorities,to help accelerate the growth of sustainable finance instruments,especially for developing economies and SMEs,in the context of national development objectives and priorities.I.Recommendations for MDBs,technical assistance providers,and other international organization

81、s Recommendation 11 Devote more resources and expertise to de-risk finance operations for sustainable activities in developing countries.MDBs should devote more resources,within their mandate and capital constraints,to support blended finance operations and technical assistance programs to help clie

82、nts prepare bankable and sustainable projects and programs for developing countries.They should also encourage staff to work on blended finance projects and programs through their internal incentive structure and mobilize resources across the organization through the use of both concessional and non

83、-concessional finance.It would be desirable to develop a complete solution for blended finance,from identification and preparation of bankable projects to blended financial closure,taking into account the G20 DWG work on Principles to scale up Blended Finance.MDBs and DFIs should collaborate further

84、 to build relevant knowledge and understanding with respect to market structure,regulations,institutions and the local political economy dynamics within developing countries.Smart and innovative blending operations should also avoid crowding out private capital.Furthermore,the use of climate-related

85、 risk 17 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group insurance has potential to increase the supply of blended financing mechanisms(see Box 3.2).Recommendation 12 Enhance and expand capacity-building services,including via training of officials,regulators a

86、nd financial sector professionals,to support the design of sustainable finance policies and roadmaps in developing countries,and enhance capacities of local FIs.MDB,technical assistance providers,and international organizations can focus on capacity building programs that address the development of

87、sustainability alignment approaches,sustainable finance policies and regulation(incl.disclosure requirements),verification services,ESG rating methodologies,policy incentives,green finance product development,and application of fintech tools to sustainable finance.The forms of capacity building can

88、include training activities as well as tailored technical assistance programs.This should also include support to local banks and insurance companies that have in place or want to develop sustainable finance strategies and credible net-zero transition plans.Recommendation 13 Explore alternative sust

89、ainable finance mechanisms,such as by serving as corner-stone investors for sustainable or transition projects or organizing demonstration projects in developing countries to support the generation of an investible SDG-or Paris-aligned pipeline.MDBs and other IFIs can help launch demonstration proje

90、cts investing in typical sustainable and transition activities in developing countries with a clear purpose of learning about ways to reduce political,business,and operational risks when implementing similar projects.These learnings should help improve funding access and 18 2022 G2 0 S U S T A IN A

91、B LE FIN A N C E R E P OR T Sustainable Finance Working Group reduce funding costs of similar projects.MDB participation could include acting as providers of funds or of technical assistance for project design and operations.Recommendation 14 Promote international collaboration to improve the compar

92、ability and interoperability of sustainable investment alignment approaches as appropriate and applicable,on voluntary basis,in order to facilitate cross-border sustainable investment flows.Cooperation between MDBs bilateral development finance institutions,technical assistance providers,country aut

93、horities and international organizations to develop internationally comparable indicators or tools may facilitate cross-border and cross-market sustainable capital flows.This could be achieved through the comparison of alignment approaches,such as taxonomies and standards,and the identification of a

94、reas of commonality and differences(e.g.,Common Ground Taxonomy by the International Platform on Sustainable Finance).MDBs could promote regional collaboration on alignment approaches to facilitate the development of regional sustainable finance markets.II.Recommendations for country authorities and

95、 domestic FIs Recommendation 15 Develop approaches to align investment with sustainability goals.Aligning on how market participants should identify sustainable and transitional activities is foundational to the development of a well-functioning sustainable finance market,as it helps to protect mark

96、et integrity and provides the basis for developing products and allocating policy incentives.19 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Governments and regulators could use their convening power to develop,adopt,or encourage systems to align investment

97、with the SDGs and the Paris Agreement,including,but not limited to,principle-or taxonomy-based identification schemes and guidance on labelling of sustainable financial products.Jurisdictions are also encouraged to coordinate and learn from one another to adopt best practices and promote interoperab

98、ility among approaches.Recommendation 16 Help the ISSB to better support developing countries and SMEs.Therefore,all countries and relevant national corporate reporting standard setters based on their specific domestic circumstances,should actively participate in the ISSBs work and be innovative in

99、developing best practices to lower the cost of disclosing and accessing sustainability data.For example,national or local governments could consider developing,or encourage the private sector to develop,sustainability data platforms to serve financial market participants.Recommendation 17 Develop th

100、e necessary infrastructure for domestic sustainable loan and bond markets.Experiences from jurisdictions with more developed sustainable finance markets suggest that green loan and green bond markets can be scaled up quickly when jurisdictions are equipped with the basic market infrastructure for ba

101、nking services and bond markets.In developing these markets,governments and regulators should have a clear strategy towards the identification and labelling of green loans and bonds,the methodologies for validating the environmental benefits of underlying activities,and necessary sustainability disc

102、losure requirements or 20 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group standards.For instance,the benefits of the standardization of targets and key performance indicators within a sector for transition instruments such as sustainability-linked bonds could b

103、e pursued.Governments could also lead by example by issuing sovereign sustainable financial instruments which,through a demonstration effect,can have positive spillovers on the methodologies and standards of verification and disclosure for corporate sustainable issuance.Recommendation 18 Introduce p

104、olicy incentives to scale-up sustainable finance instruments.Many policy incentives could be considered by country authorities to encourage participation of private capital in sustainable investment.This could include government subsidies for green loan and green bond verification,correcting market

105、signals through environmentally-related taxes and other price-based instruments,interest subsidies for green projects,fiscal incentives for green bonds and central bank actions within their mandates-that could increase the demand for sustainable financial assets.Other policies,such as emissions trad

106、ing schemes or other pricing mechanisms and regulatory action,can help create an enabling environment to boost the demand for and reduce the costs of sustainable products,services,and technologies.Jurisdictions can select an optimal mix of these policy incentives based on their local circumstances.R

107、ecommendation 19 Deploy digital technologies to reduce the costs of sustainable finance operations.Digital technologies have the potential to increase the efficiency and reduce the costs of sustainable finance operations.MDBs,technical assistance providers,and relevant 21 2022 G2 0 S U S T A IN A B

108、LE FIN A N C E R E P OR T Sustainable Finance Working Group international organizations and networks should devote more resources in assisting and providing capacity building for developing countries to adopt and deploy such technologies.Examples of use cases of digital technologies include identifi

109、cation and labelling of sustainable activities and assets,tracking and disclosure of granular ESG information,trading and management of sustainable assets.Recommendation 20 Develop sustainable financial products suitable for use by SMEs,and incentivize their uptake,such as in the case of SSCF.SMEs o

110、ften lack access to sustainable finance capital market instruments due to high costs for them to access capital markets and lack of sustainability rating or accreditation.Adopting SSCF in a phased manner while considering country circumstances,for example,is one way to help solve both issues.Governm

111、ents should encourage or provide incentives to firms to adopt SSCF and other innovative sustainable finance products and services for SMEs.MDBs could support this effort by offering technical assistance to developing countries.Recommendation 21 Support SMEs and local FIs to develop their awareness a

112、nd capacity in addressing climate change to reduce their impact.SMEs often have more limited information and capacity to tackle climate change.Larger local FIs connection with wide-ranging SMEs could be an important channel to overcome this issue,as they could provide valuable advice based on rich i

113、nformation on SMEs business strategies and challenges they face.This should include work to support local banks,pension and sovereign wealth funds,and insurance companies to develop and implement sustainable finance 22 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working

114、Group strategies and credible net-zero transition plans.This channel is particularly important for jurisdictions with a bank-centric financial system,including developing countries,where greening supply chains can have a significant impact in achieving the countrys climate change commitments.23 2022

115、 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Reporting on progress on the G20 Sustainable Finance Roadmap&2021 recommendations Despite the strong financial and economic headwinds arising from multiple crises(the effects of which on the global economy and sustain

116、able finance were broadly addressed in the July FMCBG Chairs Summary and will be again in the upcoming October statement),G20 members,IOs,MDBs,market participants,and other networks and initiatives remain committed to advance global sustainable finance markets.In relation to this years work,the firs

117、t G20 FMCBG Communiqu states that the 2022 G20 Sustainable Finance Report will report and assess on progress in addressing priorities in the G20 Sustainable Finance Roadmap.Since then,G20 members,IOs,MDBs,networks,other initiatives and G20 working groups have reported to the SFWG on progress made to

118、wards the 5 Focus Areas3 and the 19 recommended Actions of the Roadmap.The most marked progress was in areas related to the development and adoption of standards,taxonomies,net-zero commitments,and other alignment approaches for identifying sustainable activities and relevant investments,and princip

119、les and frameworks for disclosure of sustainability information for assessing sustainability-related risks,opportunities,and impacts,as well as net-zero commitments made by corporates and financial institutions.While some progress was made to build capacity on sustainable finance issues-especially f

120、or emerging markets and developing countries,to raise MDBs ambition on climate action and broadly mobilize private finance,and to advance digital solutions supporting the mobilization and tracking of sustainable investment-the SFWG notes the need to accelerate efforts to address these priority actio

121、ns identified in the Roadmap.At SFWG meetings,some members noted that additional work on other sustainability related 3 The Roadmap counts 5 Focus areas:(1)Market development and approaches to align investments to sustainability goals;(2)Consistent,comparable,and decision-useful information on susta

122、inability risks,opportunities,and impacts;(3)Assessment and management of climate and sustainability risks;(4)Role of IFIs,public finance and policy incentives;and(5)Cross-cutting issues.24 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group objectives,such as cons

123、ervation of nature and biodiversity,pollution control,and the development of the circular carbon economy,is needed.The full details of the progress reported by both IOs and G20 members is available on an online dashboard on the SFWGs website.In particular,IOs reported deploying efforts to set framew

124、orks and guidelines to overcome obstacles in the financial system and facilitate the achievement of the Sustainable Development Goals(SDGs)and the Paris Agreement.Moreover,IOs have been working on providing consistent guidance to maximize positive impacts for the financial sector,improving corporate

125、 disclosure on sustainable development-related matters,and addressing information gaps on sustainability data and regulatory measures.Some of them have also been working on performing studies on liability risk,and on achieving a coherent system of norms for impact.The forum on international policy l

126、evers for sustainable investment,hosted by the Indonesia G20 Presidency in June 2022,discussed a range of policy levers that can incentivize or create an enabling environment for sustainable finance.Additionally,the SFWG took note of some of the progress on the SFWGs 2021 Priority Areas4.The Interna

127、tional Financial Reporting Standards(IFRS)Foundation established the new International Sustainability Standards Board(ISSB),to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors information needs.Jurisdictions and relevant national/regional

128、standard setters and the ISSB are encouraged to cooperate with the goal of ensuring interoperability of national/regional standards and the global baseline in order to minimize fragmentation of sustainability disclosure requirements,reduce reporting burdens,and enable the availability of consistent

129、sustainability information for users.Additionally,the MDB Climate Working Group is working under a 4 In 2021,priority areas were:(1)Improving comparability and interoperability of approaches to align investments to sustainability goals;(2)Overcoming information challenges by improving sustainability

130、 reporting and disclosure;and(3)Enhancing the Role of International Financial Institutions in supporting the goals of the Paris Agreement and 2030 Agenda.25 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group joint approach with six core areas for aligning with the

131、 Paris Agreement and covers all finance flows and aims to have this work completed and operational by 202324.However,while MDBs have made good progress,there remains a significant gap between the scope of their climate work programs and the scale and speed required to achieve the goals of the Paris

132、Agreement and 2030 Agenda.Discussing policy levers that incentivize financing and investment to support the transition It was highlighted on multiple occasions the interdependence between sustainable finance and climate mitigation policies.As described in greater detail in the accompanying annex to

133、the Report,on June 13,2022,the G20 Indonesia G20 Presidency convened an international forum on policy levers for sustainable investment.Members shared experiences and discussed a range of policy levers that can incentivize sustainable financing and investment that supports an orderly,just and afford

134、able transitions towards a low-greenhouse gas emissions and climate-resilient economy,with due considerations of national circumstances and in line with the Paris Agreement.The focus of the discussion was on national policy levers;however,international cooperation,coordination and impact was discuss

135、ed as well.Members acknowledged this work is in its nascent stage,but generally expressed that greater clarity on policy paths could reduce uncertainty and catalyze action that allows financial firms to allocate capital.They also recognized the complementary nature between effective policy levers an

136、d financing,the need to better understand advantages and disadvantages,as well as the effectiveness of the full range of climate mitigation and adaptation policy levers,at both national and international levels,and the need to mitigate potential unintended economic spillovers or distributional impac

137、ts as much as possible.This technical discussion was foundational to the High-Level Breakfast Discussion on Climate Mitigation5.5 This initiative was organized by the Indonesian G20 Presidency,within the Third Series of G20 FMCBG Meeting Activities,held in July 2022 in Bali.26 2022 G2 0 S U S T A IN

138、 A B LE FIN A N C E R E P OR T Sustainable Finance Working Group This initiative gave FMCBGs the opportunity to share their national experiences about policies to address climate change and preserve financial stability and economic growth in the long-term.Chapter I-Developing a Framework for Transit

139、ion Finance The G20 recognizes the important role of governments in supporting an orderly,just,and affordable transition as well as the critical role of a resilient financial sector in mobilizing private sector finance to facilitate such a transition.In the G20 Sustainable Finance Roadmap,G20 leader

140、s acknowledged that the existing sustainable finance landscape has gaps in terms of enabling the climate transition and identified specific actions to fill these gaps.Indeed,despite the rapid growth of climate financing in recent years,its proportion to total global financing remains low,and accordi

141、ng to the IPCC its size is significantly smaller than the financing needed to achieve the objectives of the Paris Agreement.This is partly due to the fact that current green and sustainable finance alignment approaches generally aim to support activities that are already green and sustainable.Howeve

142、r,a much larger part of the global economy,including sectors that are currently GHG intensive but in its process of transitioning to low or net-zero emissions,also require financing.An excessively narrow interpretation of“green”or“sustainable”finance could limit the flow of capital towards activitie

143、s and investments that are needed to support the climate transition.For example,it may entail the risk that some GHG-intensive firms be penalized despite having credible transition plans,thus increasing the cost of capital to firms in need of investment to realize their green transition goals.Recogn

144、izing this challenge,many G20 members are exploring measures to integrate transition considerations into their broader approach to sustainable finance.Transition finance,as discussed in this report,refers to financial services supporting the whole-of-economy transition,in the context of the Sustaina

145、ble Development Goals(SDGs),towards lower and net-zero 27 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group emissions and climate resilience,in a way aligned with the goals of the Paris Agreement.The G20 Sustainable Finance Roadmap,endorsed as voluntary by G20 Le

146、aders in October 2021 in Rome,includes various actions to better integrate transition considerations in sustainable finance approaches and explicitly asked the G20 SFWG to“work with appropriate IOs to develop high-level principles for a credible and consistent framework for financing a just climate

147、transition”.Drawing inputs from various international organizations and analyses of current market practices,the SFWG has developed high-level principles for jurisdictions,to the extent permitted under a jurisdictions domestic authorities,and financial institutions to consider on a voluntary basis t

148、aking into consideration the local unique context of different jurisdictions,related to the following five pillars:1)identification of transitional activities and investments,2)reporting of information on transition activities and investments,3)developing transition-related finance instruments,4)des

149、igning policy measures,and 5)assessing and mitigating negative social and economic impact of transition activities and investments.The initial focus of our recommended principles for transition finance framework is to guide the development of policies and financial services to support the climate-re

150、lated transition.Over time,the focus of transition finance can be broadened to cover other sustainability related objectives,such as conservation of nature and biodiversity,pollution control,and development of the circular economy.We acknowledge that jurisdictions could consider adoption of these pr

151、inciples on a voluntary basis,and implement them in a phased manner,and capacity building services offered by the international community will be important for accelerating their adoption especially in developing countries.An example of the application of the transition finance frameworks five pilla

152、rs is the Indonesias Energy Transition Mechanism(Box 1.8).28 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Pillar 1.Identification of Transitional Activities and Investments An important foundation for scaling up transition finance is to coordinate internatio

153、nally on how the financial sector should identify transitional activities and investments(e.g.,by using a principle-based approach,a taxonomy-based approach,or a combination of both)and engage with relevant firms to raise awareness and provide the appropriate financing needed and help promote the cr

154、edibility of these activities and investments in contributing to climate goals.These approaches will enable market participants to assess and mitigate“transition-washing”risks and thus protect market integrity,and will facilitate the flow of capital towards investments that support climate goals.Dra

155、wing on inputs from members and knowledge partners,country case experiences,financial institutions(FIs)and sector specialists,the SFWG reviewed a range of approaches,including:Principle-based approaches provide high-level guidance for identification of tools that can help support climate transitiona

156、l activities and relevant investments and can be applied at the activity level,company level,financial instrument level,portfolio level as well as industry level.Principle-based approaches can provide guidance on transition plans,strategies,emission reduction targets,pathways,timeframes,transparency

157、 and verifiability.An example can be found in annex Box 1.1(Transition Finance in Japan).Taxonomy-based approaches takes the form of a list of specific activities that support the climate transition,typically classified by sector.Taxonomies have varying levels of specificity in terms of technical pa

158、thways and emission reduction targets,sometime reflecting local or national circumstances and availability of resources.In general,taxonomies can be used by investors and companies to identify,label,and report on transition activities as well as enable the measurement/monitoring of transition perfor

159、mance.Some cases can be found in annex Boxes 1.2(EU taxonomy)and 1.3(Chinas Huzhou City Transition Finance Catalog).29 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Combination of approaches,where some sectors/activities areas are defined using a taxonomy-bas

160、ed approach,and other sectors/activities are identified by a principles-based approach.The list above is not exhaustive,and there are also other approaches and tools that can support identification of transition-aligned activities and investments.For example,some jurisdictions support regulatory or

161、voluntary best practice key performance indicators(KPIs)that help market participants to assess a financial products transition strategy and encourage the use of transition finance instruments.Each approach has different advantages and challenges and entertain wide variations.Jurisdictions should co

162、nsider the most appropriate approaches given their specific policy priorities,capacities,market sophistication,regulatory framework,and use cases.A jurisdiction could choose to differentiate them in activity-based,entity based,and portfolio-based applications.The factors for jurisdictions to conside

163、r when developing their own approach could include but not limited to:-the amount of technical expertise required(especially as it relates to each sector/activity),-the degree to which credible forward-looking mid-and long-term transition plans can be captured by the approaches;-the amount and ease

164、of coordination required across government agencies;-the costs of supporting essential verification and other consultative services(particularly for smaller firms);-the desired flexibility to adjust and adapt to transition pathways as technology and supporting policy evolves;-the degree of(legal)cla

165、rity on what is a transitional activity and corresponding contribution to reducing greenwashing risks;-the ability to provide a shared reference encouraging and supporting engagement between policy makers,investors and companies,and-the ability to support other investment decisions,public policies o

166、r other sustainable finance tools.30 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Regardless of the specific approaches,they should all serve the objectives of helping FIs and project owners to identify transition activities or relevant transitional investme

167、nt opportunities,understand their contributions to the climate transition,reduce market frictions and associated costs,and enhance transparency and credibility by reducing transition-washing risk for FIs,project owners,and other market participants.Accordingly,this year,the SFWG has developed the fo

168、llowing set of voluntary,high-level principles for jurisdictions that intend to develop or adopt approaches to identify transition activities or investment opportunities.They build on and complement the G20 voluntary principles for alignment approaches(Action 1)in the G20 Sustainable Finance Roadmap

169、.The approaches should:Principle 1:Put in place either a taxonomy or a set of principles,or other approach to guide FIs and real economy firms to identify and understand what a transition activity or investment opportunity is and reduce the identification barriers,costs and transition-washing risk,e

170、specially with respect to the potential of long-term GHG intensive lock-in;Principle 2:Help ensure that identification of transition activities or investment opportunities are based on transparent,credible,comparable,accountable,and timebound climate objectives,as appropriate,such as those for clima

171、te resilience and/or GHG reduction(e.g.,carbon intensity,energy efficiency),and in line with the goals of the Paris Agreement.Principle 3:Be applicable to potential use cases at the project,entity,industry and aggregate(e.g.,portfolio,funds and indices)levels;Principle 4:Include clear recommendation

172、s around verifiability of transition activities or investments(e.g.,by providing guidance for transparency,benchmarking,or independent verification),including their alignment with GHG pathways consistent with the goals of the Paris Agreement;Principle 5:Be dynamic reflecting and supporting evolving

173、scientific,market and technological developments,policy environment,abatement cost curves,as well as developmental needs and priorities;Principle 6:Consider and include measures to facilitate an orderly,just and affordable transition,while avoiding or mitigating possible 31 2022 G2 0 S U S T A IN A

174、B LE FIN A N C E R E P OR T Sustainable Finance Working Group negative impacts on employment and affected households,communities,and other SDGs(including environment protection and biodiversity),or risks to energy security and price stability;Principle 7:Facilitate cross-border uses,as applicable,by

175、 ensuring comparability and interoperability of alignment approaches across jurisdictions considering the G20 high-level principles for developing alignment approaches of the G20 Sustainable Finance Roadmap(action 1)Pillar 2.Reporting of Information on Transition Activities and Investments Reliable,

176、consistent,verifiable,and comparable information on transition financing could help interested investors and other stakeholders evaluate whether transitional activities and relevant investments are aligned with the Paris Agreement.High-quality reporting will also enable these stakeholders and invest

177、ors to assess the credibility of transition claims,for example,whether the use of proceeds from financial instruments is appropriate,whether the assessment of transition outcomes is based on scientific methodologies,and whether the implementation process is transparent.Transition plans are also key

178、to ensuring that FIs and real economy firms are actively and strategically thinking about and setting out how to align their business models with the net zero transition and setting out steps to accomplish this in a timely and orderly manner.In doing so they contribute to the wider economy transitio

179、n,and incentivize others around them(e.g.,clients,customers,etc.)to do the same in a way that looks ahead,beyond simply the point-in-time provision of green activities or investments.Existing public or private practices of transition-aligned reporting can be found at the corporate,portfolio and proj

180、ect levels.Many fundraisers have followed guidelines for reporting on transitional activities or relevant investments developed by the International Capital Markets Association(ICMA),e.g.,the Climate Transition Finance Handbook or the well-established Green Bond Principles,the Guidance on Metrics,Ta

181、rgets,and Transition Plans of FSBs Task Force on Climate-Related Financial Disclosures(TCFD),and some jurisdictions,countries,stock exchanges and FIs have issued mandatory 32 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group requirements,best practices or guideli

182、nes for reporting.The SFWG welcomes the International Sustainability Standards Boards workplan to develop a comprehensive global baseline of sustainability disclosures standards and highlights the importance of cooperation between the ISSB and national and regional standard-setters as well as other

183、reporting initiatives with a view to ensure interoperability between the global baseline and domestic legal frameworks.Based on a review of current market practices,the SFWG recommends that the reporting framework for transition activities and investment opportunities,which can be considered by juri

184、sdictions and by FIs on a voluntary basis,include at least the following elements:Principle 8:Disclose up-to-date transition plans,with credible and ideally verifiable,comparable,science-based interim and long-term goals,and timelines for achievement(for example,technical pathways,fund raising and i

185、nvestment plans etc.);Principle 9:Report on progress at regular and appropriately spaced time intervals,including overall mitigation and adaptation objectives,such as net-zero and interim targets that are supported by up-to-date and scientific methodologies,consistent with the goals of the Paris Agr

186、eement;Principle 10:Disclose climate data including Scope 1 and Scope 2 GHG emissions data,and material Scope 3 data as it becomes possible.The disclosure of Scope 3 emissions data can progress using a phased approach,as it becomes possible,reflecting progress on data availability and capacity.Firms

187、 should report on relevant approaches and policies for disclosure,such as the internal carbon price used,and the characteristics of carbon credits or carbon offsets used to meet the transition targets;Principle 11:Disclose corporate governance arrangements that ensure such transition activities or p

188、lans will be implemented properly,including with respect to risk management systems and due diligence processes;Principle 12:Disclose methodologies used to measure transition progress and achievements,including,but not limited to,the metrics and methods used to assess progress on climate objectives,

189、such as emissions reductions,removals,recycling and reuse,and/or any 33 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group benchmarks used therein(e.g.,carbon intensity)and the extent to which such methodologies align with internationally recognized scenarios;and

190、Principle 13:Disclose the use of proceeds raised from transition finance instruments(for use of proceeds instruments)or the performance of KPIs/SPTs that are material to the fundraisers businesses(for general corporate purpose instruments such as sustainability-linked loans or bonds).Pillar 3.Transi

191、tion-Related Financial Instruments To improve the resilience of the financial sector and fully support the investment needed to facilitate the whole-of-economy just and affordable climate transition,it will be critical that a wide range of relevant financial instruments be developed and utilized to

192、provide the necessary finance for the transition of the whole economy.Based on current market practices(See Boxes 1.5-1.8),input from knowledge partners,and engagement with the private sector and other stakeholders,the SFWG identified a suite of financial products and toolbox that can be included as

193、 transition finance instruments,such as:Debt instruments:Instruments can include use-of-proceeds green/transition bonds/loans,sustainability-linked loans or bonds,or fixed/term deposits,reimbursable loans and other debt finance instruments to support suitable transition activities.Equity-related ins

194、truments:Instruments can include transition-focused buyout funds,venture capital funds,and mezzanine financing,among other equity investments.These instruments may be useful for companies adopting new technologies,highly indebted companies,or SMEs(See Box 1.6 for a discussion of the EUs transition f

195、und).Risk mitigation products:Examples include insurance products that are designed to hedge transition-related risks such as the use of new equipment or technologies,risk-mitigation tools,such as guarantee or other credit enhancement products or blended-finance instruments,that can also help mitiga

196、te transition risks.34 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Other instruments:Products include,but are not limited to,asset-backed securities,real estate investment trusts,blended finance,and exchange-traded funds that support transition activities o

197、r the aligning of investment portfolios with the climate transition.The design of these products should incorporate requirements that the underlying assets credibly contribute to decarbonization and financial stability considerations.The SFWG recommends FIs,on a voluntary basis,to develop and expand

198、 their toolbox to include transition finance instruments,building on jurisdictional frameworks.Drawing from G20 members and KPs inputs,the SFWG recommends that the design and use of transition finance instruments feature the following principles:Principle 14:the fundraiser should present a detailed

199、and transparent,science-based transition plan that is aligned with the goals of the Paris Agreement and consistent with a credible alignment approach(a taxonomy-based approach,a principles-based approach,other alignment approach or a combination of them)to inform market participants on the ambition

200、and focus of their transition efforts;Principle 15:the fundraiser should adhere to the transition-related disclosure guidance or requirements,as outlined in the previous section and to all other applicable requirements in their jurisdiction(s),to help ensure the transparency of the transition activi

201、ties,targets,metrics and KPIs,as well as implementation of any safeguard and correction measures,as appropriate,and Principle 16:transition finance instruments could incorporate built-in incentives/penalties,of sufficient magnitude,to encourage strong performance against GHG emission reduction targe

202、ts and other climate-or sustainability-related performance targets(SPTs).Pillar 4.Designing Policy Measures GHG-intensive companies are increasingly being confronted with challenges to secure long-term financing as market participants perceive them to be 35 2022 G2 0 S U S T A IN A B LE FIN A N C E

203、R E P OR T Sustainable Finance Working Group high-risk.Given the importance of facilitating an effective,rapid,whole-of-economy climate transition,and not just supporting the low-or zero-emissions firms/projects currently viewed as“pure green”,policy action is needed to send correct market signals t

204、o incentivize and accelerate the mobilization of private capital flows to enhance the sustainability or support the orderly transition of high-emitting and/or hard-to-abate sectors and to mitigate the risks of creating stranded assets.According to Action 16 of the G20 Sustainable Finance Roadmap,the

205、 SFWG will work with other G20 groups,relevant international organizations,networks,and initiatives as appropriate,to analyze the implications of such public policy levers.While the identification of transition activities and investments as part of pillar 1 is one key aspect of this,the G20 forum on

206、 international policy levers for sustainable investment has also confirmed that there is a need to better understand the implications of carbon pricing mechanisms vs.non-pricing mechanisms in light of developing appropriate country or sector specific policy mixes to quickly reduce GHG emissions at l

207、ow cost while providing a level playing field for sectors and industries(see Box 3.1).In order to boost the international impact,international cooperation and coordination should be improved.Policy measures generally fall into two categories:1)the use of public financing,de-risk,or otherwise support

208、/incentivize transitional activities by improving the availability and affordability of financing for the climate transition;or 2)price and non-price-based policy tools(such as certain incentives,regulatory measures,sectoral standards,etc.)6 designed to reduce emissions and accelerate the climate tr

209、ansitions by internalizing the costs of firms and projects in order to inform the financial decision-making of market participants.Where consistent with the mandate of relevant authorities,examples of these policy incentives,could include:6 Noels,J.and R.Jachnik(2022,forthcoming),“Assessing the clim

210、ate consistency of finance:taking stock of methodologies and their links to climate policy objectives”,OECD Environment Working Papers.36 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group de-risking facilities,such as government,multilateral development bank(MDB)

211、provided loan guarantees or first-loss provisions(see Box 1.6 and 1.8),concessional financing towards transition firms and/or projects,such as interest subsidies(either directly or on-lending via commercial banks),subsidies for third party verification of transition finance instruments(e.g.,used in

212、Hong Kong SAR of the PRC,Japan,and Singapore),central bank instruments(e.g.,used by the Peoples Bank of China,Bank Indonesia and Bank of Japan)where mandates allow,emission trading schemes(ETS),carbon taxes,or other emissions pricing mechanisms that put a price on covered emissions,revenues from emi

213、ssions pricing mechanisms could be used for a variety of purposes,including for example for supporting climate-aligned investments,and dividend/rebate programs for impacted communities;investment by government sponsored“transition funds”,public procurement,as a driver for innovation and for providin

214、g industry with incentives to develop environmentally-friendly works,products and services,government spending for green research and development of technologies that support the climate transition activities,preferential tax treatment or incentives for companies engaged with transition activities,e

215、.g.,via accelerated depreciation of fixed assets or other tax credits(in order to internalize external benefits),sectoral regulations that can boost demand or market shares for transition activities,e.g.,setting minimum energy efficiency standards for power,building and manufacturing sectors or envi

216、ronment friendly labelling certifications for products,and environment management standards like ISO 14000 series etc.(e.g.,Bank Indonesias LTV on green property loans and 0%down payment for electric vehicle purchase).introduction of regulatory or voluntary best practice key performance indicators(K

217、PIs)that help market participants to assess a financial products transition strategy and encourage the use of transition finance instruments.37 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Drawing from inputs from G20 members,knowledge partners(KP),the SFWG

218、recommends:Principle 17:Policy makers could design appropriate policies,incentives and regulatory environments and work to ensure they are effective in improving the bankability of transition activities and crowding in more private sector investment,taking into account national circumstances and in

219、the context of sustainable development and efforts to eradicate poverty.Authorities should also consider providing forward guidance on the implementation of such policies to provide regulatory certainty to investors.Principle 18:IOs and MDBs could play a key role in providing technical assistance an

220、d long-term financing to countries,especially developing countries,in designing and implementing suitable policy measures to support transition projects.Principle 19:International cooperation should be promoted to ensure transparency and understanding across approaches,as well as to exchange good pr

221、actices and expertise.Pillar 5.Assessing and Mitigating Negative Social and Economic Impact of Transition activities and Investments While it is encouraging that governments,FIs,and many other stakeholders are taking actions to drive transition activities and investments,it is also important to note

222、 that the transition process(i)requires immediate action,as lower-bound estimates that every year the transition is delayed could cost an additional USD 150 billion7;and(ii)may generate negative social and economic impacts on different households,workers,groups,communities,indigenous people,enterpri

223、ses,sectors and regions especially those in 7 Moritz Baer,Jacob Kastl,Alissa Kleinnijenhuis,Jakob Thomae,Ben Caldecott(2021)The cost for the financial sector if firms delay climate action).Climate Stress Testing and Scenarios Project(CSTS),Oxford Sustainable Finance Group,University of Oxford&2 Inve

224、sting Initiative.https:/2degrees-investing.org/wp-content/uploads/2021/11/The-Cost-for-the-Financial-Sector-if-Firms-Delay-Climate-Action.pdf 38 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group developing countries.Therefore,tailored transition programs should c

225、onsider ways to address negative impact resulting from the transition.For example,the emissions-intensive power sector,and some high-emitting industrial sectors(such as steel,chemicals,and cement)will face significant transition pressure both in the short term and continuing through the next few dec

226、ades.While ensuring that employment and social gains are maximized,it will be critical for public policy to(i)address the potential negative spillovers for certain groups or households such as unemployment,deterioration in local fiscal capacity and community services,shortage of energy and materials

227、,and price increases in certain sectors or products used by the most vulnerable segments of the population;and to(ii)reinforce the positive spillover effects such as new employment opportunities in low-or zero-emission sectors or better health outcomes,which could all have implications for relative

228、prices.The SFWG recognizes that the potential negative distributional impacts of the climate transition are most likely to be borne by the most vulnerable segments of the population,and that poor communities and regions tend to be affected more significantly.The SFWG also recognizes that the climate

229、 transition,nature,and biodiversity are all inextricably linked,and that governments should also consider the associated impacts of the climate transition on the environment,which also can result in negative economic and social impacts on the most vulnerable.One of the possible ways to mitigate an a

230、dverse impact of transition on energy prices and security is to use low-emission types of energy sources at the first stage.This emerging consensus was underscored in the Paris Agreement preamble,the G20 Leaders Rome Declaration,and at COP26 in Glasgow,where the parties recognized“the need to ensure

231、 just transitions that promote sustainable development.”The Glasgow decision also highlighted the need to accelerate“the phasedown of unabated coal power while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognizing the need for support towar

232、ds a just transition.”Building on this momentum,it is important that the SFWG transition finance framework provide guidance to jurisdictions to operationalize in a timely fashion the“just”element of the transition process(See Box 1.7 and 1.8)39 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Su

233、stainable Finance Working Group Taking impacts on employment considerations as an example,our initial dialogues with private sector specialists and consultation with International Labour Organization(ILO),have yielded the following ideas on how jurisdictions or firms might incorporate the assessment

234、 and mitigation of social and economic impacts into transition finance frameworks.For example:In setting out parameters or eligibility criteria for transition activities and transition plans of corporates,regulators or FIs could encourage the fundraiser(the company)to conduct due diligence to identi

235、fy,avoid and address adverse impacts on employment associated with the transitional activities;In cases where the implementation of the companys transition plan is expected to result in significant unemployment and/or other social impacts,the company could include commensurate mitigation measures(e.

236、g.,severance package,effective retraining and reskilling programs),which complement the role of the social security system,as part of its transition plan;The employment impact assessment and mitigation measures(e.g.,severance package,effective retaining and reskilling program),as well as the progres

237、s of their implementation,could be disclosed to the financiers and the market;Regulators and financiers could consider including social and employment related performance measures alongside emission reduction targets as part of the KPIs that are linked to the terms of the transition finance products

238、(e.g.,coupon interest rate of a sustainability-linked loan or bond)as incentives/penalties,in order to encourage greater attention to the social aspect of the transition.In addition to entity/instrument level considerations to the employment issue,the SFWG also acknowledges that just transition is t

239、o be considered at a much broader context.The SFWG welcomes further analysis to better understand and measure the macroeconomic and distributional impacts of climate change and the climate transition and,in line with the Action 13 of the Roadmap,as well as further coordination in this area with the

240、G20 Framework Working Group(FWG),and other international organizations and networks such as the NGFS,the WBG,the IMF,the ILO and the OECD to 40 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group enhance a common understanding on these issues and to identify the mo

241、st appropriate policy mix to mitigate negative social and economic impacts.Climate transition remains a nascent area for the financial sector and governments,however,it is important to allow more initiatives by country authorities and the private sector before the G20 comes to a more prescriptive vi

242、ew on how to measure the macroeconomic,local and social impacts of transition,on the appropriate roles the public and private sector and how they should collaborate in mitigating the negative impact and maximizing positive ones,and how these considerations can operationalize in financial transaction

243、s.The SFWG makes the following high-level recommendations:Principle 20:Encourage fundraisers to assess and mitigate potential impacts of their transition plans or other strategies.In setting eligibility criteria and reporting framework for transition activities,authorities or FIs,where consistent wi

244、th domestic mandates and local laws and regulations,should encourage the fundraiser(the company)to assess the potential socioeconomical implications of its transition plan,to be transparent about these implications and measures taken to mitigate negative impacts or highlight potential net positive i

245、mpacts;Principle 21:Develop demonstration cases of just transition.Appropriate IOs,including the ILO,OECD,UNDP and MDBs,should work with the private sector in developing more concrete transition finance cases that explicitly incorporate“just”elements of transition,including risk and impact measureme

246、nt and reporting,and KPI design,and update the SFWG in future meetings.Principle 22:Strengthen the dialogue and cooperation between governmental agencies,employers and workers representatives,markets regulators,academia,civil society and private sector stakeholders to define a comprehensive strategy

247、 to mitigate negative economic and social implications.41 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Chapter II-Improving the Credibility of Private Sector Financial Institution Commitments 1.Background Private Financial Institutions(FIs)have an important

248、complementary role to play in accelerating the climate transition and achieving the Agenda 2030 by providing the capital needed to finance transition activities and investments associated with low-emissions firms and technologies and adaptation plans and measures.They are uniquely positioned to help

249、 to provide their clients across all sectors of the economy,and in all the countries that they operate,with the resources,expertise and advice to guide their transition to a climate resilient future.Over the past 18 months,more than 4508 private sector financial firms mostly in developed countries h

250、ave made voluntary net-zero or other climate-related commitments,representing a potentially significant shift in investment that can support the climate transition across their portfolios.The growth in commitments has been accompanied by a proliferation of methodologies,criteria and benchmarks to se

251、t net-zero commitments with varying levels of robustness.There is a growing urgency for all commitments to be transparent,credible,backed by robust action plans,effectively implemented and converted into real emissions cuts as rapidly as possible in order to preserve investor confidence and avoid gr

252、een and SDG washing risks.There are different schemes and initiatives that FIs and firms can choose from to make such commitments,but once committed,they should be credible.However,many challenges remain,that hinder more FIs from making credible net-zero commitments.For example,the lack of capacity

253、to collect and verify emissions data or climate adaptation needs,makes it difficult for some FIs to track and report the emissions of their clients,especially if including those of their supply chains.There is also a lack of tools,methodologies,and technical capabilities such as those related to tra

254、nsition 8 Climate Policy Initiative(2022).Private Financial Institutions Paris Alignment Commitments:2022 Update 42 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group pathways or scenario analysis,which can discourage certain FIs from setting commitments.This may

255、only further complicate for firms who operate in a jurisdiction(or multiple jurisdictions)with different national climate goals and different net-zero commitments timelines,or adaptation needs.Furthermore,FIs,like other corporations,have pre-existing legal obligations to clients and stakeholders.In

256、our consultations,we have heard from financial institutions about emerging concerns,including on how to assess and navigate potential legal implications and evolving guidance from member alliances.Many of these challenges are in the process of being addressed,for example through technical work on tr

257、ansition pathways,alignment tools,sharing best practice among institutions,and providing clarity on best practices for target setting,transition planning and transparency thereof.This underscores the timeliness of the SFWGs work as the groups early analysis can help to better identify and address so

258、me of these challenges.Recognizing the voluntary nature of these commitments,which reflect local circumstances,national strategies,and any applicable regulatory requirements9,the global operation of some FIs,business models and other elements,the SFWG has reviewed inputs from members,knowledge partn

259、ers and organized engagements with key private sector actors.This has helped to better understand the current state of voluntary financial sector net-zero pledges and other commitments related to financing the climate transition in order to develop a set of principles to:1)enhance the credibility of

260、 these commitments;and 2)progressively enhance accountability of FIs that have made these voluntary commitments.9 As previously stated,certain jurisdictions have a legal framework that will frame at least partially the nature/disclosure of such commitments 43 2022 G2 0 S U S T A IN A B LE FIN A N C

261、E R E P OR T Sustainable Finance Working Group 2.Review of market practices on climate commitments Several market-led alliances,voluntary standard-setters,think tanks and other organizations,including10,PCAF(Partnership for Carbon Accounting Financials),SBTi(Science-based Targets Initiative),TPI(Tra

262、nsition Pathway Initiative),PACTA(Paris Agreement Capital Transition Assessment)manager,UN partnership programmes(Principles for Responsible Banking;Principles for Sustainable Principles for Sustainable Insurance;Principles for Responsible Investing;Sustainable Stock Exchanges,U.N.Race to Zero)and G

263、FANZ(Glasgow Financial Alliance for Net-Zero),provide or are developing guidance and recommendations,to assist FIs with tools and methodologies for setting and implementing on a voluntary basis net-zero commitments.Commitments made by some FIs usually entail a net-zero target as well as different de

264、grees of information on underlying data,methodologies,and coverage of the commitment,for example:a target for financed emissions(GHG emissions of investment portfolios)to achieve net-zero in the long term(such as 2050),a target for the FIs own operations to achieve net-zero in the shorter to medium-

265、terms(such as 2030),as well as transition pathways and plans for the FIs exposures to GHG emission intensive sectors.To set and implement net-zero commitments,some FIs have leveraged dedicated tools and methodologies developed and/or promoted by various international initiatives11.Several FIs have a

266、lso developed internal tools to analyze transition alignment and assist financial decisions.In order to institutionalize their commitments and fully embed the interim targets into their operations,some FIs have also started to take actions to 10 This constitutes a non-exhaustive list of initiatives

267、that have developed or are developing free of charges tools and methodologies.While to date and to available knowledge,no comprehensive list of tools and methodologies exists,as examples,some tools are listed on the website of the Luxembourg Sustainable Finance Initiative(https:/lsfi.lu/tools/)11 Fo

268、r further consideration,see NGFS(2022),“Enhancing Market Transparency in Green and Transition Finance”,Chapter 3,and also OECD(2022),“ESG ratings and climate transition.”44 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group incorporate net-zero considerations in t

269、heir business strategy,engagement,and policies.Strategy Monitor a consistent and wide range of metrics to assess progress in implementing net-zero strategy and priorities(e.g.,targets for emissions reductions,support and scaling of climate solutions;engagement,internal implementation,and where relev

270、ant,retirement of transition assets).Integrate net-zero commitments into corporate governance,skills,and culture(e.g.define roles for Board and senior management for ownership,oversight and responsibility for net-zero targets;provide training and development to support teams and individuals to embed

271、 net-zero into the organizational culture and practices;explore potential incentives,such as compensation,promotions,awards,linked to net-zero targets.)Implement sector-specific strategies for decarbonization,as appropriate,in order to support efforts by clients and real economy actors to align thei

272、r practices with appropriate sectoral pathways to net-zero(e.g.,facilitate transition financing for companies in different sectors in particular high-emitting or hard-to-abate sectors;develop and roll out products that help accelerate and de-risk decarbonization in the real economy and investments i

273、n climate solutions;work on products or services that can catalyze the net-zero transition by de-risking and unlocking emerging technologies).Work with appropriate actors to facilitate an orderly,just,and affordable transition(e.g.,engage with client,portfolio companies and governments to understand

274、 and,as appropriate,mitigate localized negative social impacts).Engagement Engage with client and portfolio companies to encourage and,when feasible,enable them to also make credible voluntary net-zero commitments(e.g.,encourage net-zero alignment and support the development and implementation of tr

275、ansition 45 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group plans;support client and portfolio company alignment of entity-level trajectories with economy-wide trajectories towards net-zero);see Box 2.1 for an initiative in Japan.Hands-off divestment,in isolati

276、on,is unlikely to be an effective strategy to effect social change for the transition.This requires greater transparency of expectations and correction mechanisms and incentives for accountability where implementation falls below firms transition plans and targets over time.Policies Establish,disclo

277、se,and apply policies and conditions related to high-emitting sectors and associated low-emission technologies(e.g.,consider policies to phase out financing of unabated fossil fuels).Establish,disclose,and apply policies and conditions on the use of carbon credits and offsets(e.g.,regarding prioriti

278、zing mitigation actions to reduce direct emissions before offsetting with carbon credits,only using carbon credits for residual emissions,to neutralize residual financed emissions with permanent removals).3.Capacity constraints and challenges While many FIs have responded to calls from international

279、 networks and made commitments to achieve net-zero for operations and their investments,many challenges remain.Below are some of the key challenges,some of which can be amplified in developing countries contexts:Lack of enabling environment and professional capacity for net-zero transition planning.

280、FIs rely on accurate and credible emissions reporting from their clients and portfolio companies in order to calculate their financed emissions.There is currently limited robust and forward-looking emissions data available to FIs,with significant gaps for small and medium enterprises,emerging market

281、s and 46 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group developing countries,and certain sectors.And in many developing countries there is a general lack of trained professionals for measuring portfolio alignment and to undertake data assurance.Capacity buildi

282、ng also through the engagement of public bodies in this area is critically needed as a groundwork for net-zero commitments,as well as supporting public policies to improve the availability of information,such as corporate disclosures,which would enable FIs to have access to the necessary corporate l

283、evel information.Lack of key inputs for target setting and transition planning.For most companies and FIs embarking on net-zero target setting and transition planning,one of the first hurdles they face is the limited availability of credible data and reference points.While some jurisdictions have la

284、unched ambitious regulatory initiatives in this area,the lack of clear and publicly announced policies in many countries has made this exercise particularly challenging.While there has been notable progress in the development of climate reference scenarios,such as those issued by the NGFS,limits on

285、their usage and applicability remain12.For example,greater sectoral granularity is needed and considerations should be given to non-linearity of transition pathways for some countries and sectors.In addition,some tools for setting or verifying net zero targets have been developed mainly based on the

286、 2050 net zero timeline that are not fully applicable to potential users under other timelines.Pressures to relax pledges to maintain short-term profitability An FI journey to net-zero is usually planned over an extensive period of time.Hence,FI need to institutionalize commitments including account

287、ability mechanisms for interim and long-term targets.Indeed,and among others,shareholder rotation,as well as 12 The NGFS is working on improving the usability of the NGFS climate scenarios by enhancing their granularity(including by downscaling variables at country level and expanding the number of

288、represented sectors),improving their overall macroeconomic modelling and sectoral dynamics as well as the modelling of acute and chronic physical risks.47 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group unforeseen changes in cost-structures or profitability,for

289、 example caused by a pandemic or geopolitical tensions,risk to incentivize boards and investors to relax pledges over time in order to maintain short-term financial returns.Yet,progress on institutional investors growing emphasis on long-term enterprise value and commitment to net-zero in their enga

290、gement strategies could help foster greater commitment to net-zero pathways despite short-term profit fluctuations.Difficulty in accounting for managed phase-out of high-emitting assets FIs net-zero commitments cannot be achieved without transitions of their clients and portfolio companies.Some FIs

291、could support managed phase out of high-emitting assets of clients,such as acquisition of coal-fired power plants with a clear objective to retire or decommission the assets over time.Such financing may lead to a temporary increase of financed emissions and risk exposures in the short-term even when

292、 their carbon intensity is improved over the longer-term.These possible short-term side-effects may disincentivize FIs to provide transition finance to transform high emitting sectors.More work is needed to determine how FIs with net-zero commitments can finance the managed phase-out of high-emittin

293、g assets in ways that are consistent with their commitments,and how those commitments are reported.4.Recommendations to enhance commitment credibility The SFWG acknowledges the growing number of FIs adopting voluntary net-zero and/or sustainability commitments.In order to ensure that these commitmen

294、ts truly support an orderly,just and affordable transition,it is important that they are deemed credible to send the necessary and appropriate signals to the real economy.During 2022,SFWG members benefitted from engaging with market actors,voluntary standard setters,think tanks,and international org

295、anizations who are active in this space;48 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group collectively,these stakeholders have contributed to a sense of emerging“market practices”to be adopted and adapted by the majority of FIs making net-zero commitments,bein

296、g mindful of the size,business model of entities,and jurisdictions in which they operate.Through these consultations and knowledge exchanges,the SFWG has developed voluntary recommendations for private sector financial firms and for governments to enhance the credibility of FIs commitments.I.Recomme

297、ndations for private sector FIs When making voluntary net-zero commitments,FIs could consider the following recommendations:Recommendation 1:Apply commitments,where possible,to all operations,financing,products,services,and business lines,and be in-line with holding the increase in the global averag

298、e temperature to well below 2 degrees Celsius above pre-industrial levels,and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels.Where possible,FIs should consider integrating voluntary net-zero commitments into their business strategy,engagement,po

299、licies,corporate governance,risk management,skills,and culture.Institutions should establish,disclose and apply relevant strategies,policies and conditions,including policies to disclose,transition and phase out financing of unabated GHG-intensive activities/assets,or policies on the use of carbon c

300、redits.Institutions can work with appropriate actors to facilitate an orderly,just,and affordable transition FIs that have made voluntary net-zero commitments should also identify actual or potential adverse impacts of transition and set policies to prevent and mitigate such impacts.FIs shall also c

301、over scope 1 and 2 emissions,and,where data permits,material scope 3.Recommendation 2:Engage with clients to align practices with appropriate sectoral pathways and engage with client and portfolio companies to encourage and,if feasible,enable them to make voluntary net-zero commitments and implement

302、 them.49 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group Recommendation 3:Accompany end-date targets to achieve net-zero with science-based,time-bound interim targets,benchmarked against credible tools,pathways and frameworks,that demonstrate a feasible path to

303、wards net-zero.Institutions should consider including,(1)a thorough baseline analysis of current portfolio emissions,ideally performed at the time the commitment is made(within two years of making a net-zero commitment)and(2)adopt an emissions target to be achieved within a certain timeframe e.g.,a

304、mid-term five-year target.Commitments and targets should also be science-based and ideally verified by a third party.Recommendation 4:Use independent third-party verification/assurance(e.g.,by auditors,consultancies,NGOs or assurance companies),keeping in mind the domestic circumstances.Third-party

305、verification bodies should be transparent in the methodology they use to verify information in transition plans.II.Recommendations for relevant authorities,international organizations and networks Relevant authorities should apply the transition finance framework developed by the SFWG and in particu

306、lar keep an eye to the recommendations in Pillars 2(reporting framework of transition plans)to support voluntary net-zero commitments and create an enabling environment.Recommendation 5:Relevant authorities and regulators in individual jurisdictions,and in accordance with country capacity,their own

307、net-zero commitments,and domestic laws,could consider encouraging voluntary FI net-zero commitments,articulating how they will support and/or engage with voluntary FI net-zero commitments and corporate net-zero transition plans in a manner consistent with their mandates and objectives,in addition to

308、 domestic sustainability reporting requirements.Relevant authorities can help the real economy transition by providing clarity on how they plan to achieve the goals of the Paris Agreement,as well 50 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group as meeting the

309、ir Nationally Determined Contributions.This could include implementing mitigation policies coherent with climate goals and establishing policy frameworks that address existing market failures and enable private sector financial flows.Recommendation 6:Relevant international organizations,MDBs,initiat

310、ives and networks should coordinate their efforts to support ambitious voluntary financial sector commitments,including by providing capacity-building services;supporting efforts to improve comparability,transparency,and broad-based access to tools,technologies and methodologies(also suitable for de

311、veloping countries);and offering platforms for knowledge and data sharing.International networks,NGOs and think tanks specialized in carbon accounting,science-based target setting,and scenario development should devote resources to facilitate uptake and use of tools.MDBs and other IOs could promote

312、knowledge sharing and technical assistance programs to countries that request them.5.Recommendations to progressively enhance accountability of financial institutions that have made voluntary commitments Despite the fact that a significant number of financial institutions still needs to build capaci

313、ty to take net-zero commitments,and that global challenges remain(including in data and reference scenario availability),improving early on greater accountability of these commitment is needed to support scaling-up climate-aligned financial markets,promote market integrity,and prevent forms of susta

314、inability-washing.Accountability for credible,voluntary,financial sector net-zero commitments can help inform transition plans to achieve net-zero and other sustainability goals.Furthermore,accountability for these commitments will depend on transparent,understandable,monitorable information about n

315、et-zero 51 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group performance that can be tracked and evaluated.Yet,initiatives for tracking and assessing progress of financial sector net-zero alignment are still in their early stages.A few nascent international initi

316、atives and national-level tracking efforts are developing the relevant capabilities.Current efforts mainly consist of voluntary,self-reported data platforms to register and update progress on climate-related commitments,or high-level assessments of voluntary net-zero commitments that do not specify

317、plans for periodic updates.IOs,networks and initiatives,such as the OECD,Climate Data Steering Committee,GFANZ,Climate Policy Initiative,and World Resources Institute are starting early work to fill existing gaps.A number of jurisdictions are also taking steps to incorporate transition planning and

318、net-zero target setting and periodic update on progress towards achieving those targets into their disclosure requirements.These international initiatives should ensure broader and global representation,inclusiveness,and transparency to deliver accountable outcome.Recognizing that these voluntary co

319、mmitments have been especially made,in developed countries,and that many EMDEs may require additional technical assistance to develop the capabilities to identify,set and track net-zero and other sustainability commitments from FIs,the SFWG has identified a set of recommendations to voluntarily and

320、gradually enhance accountability of these commitments.The SFWG recognizes that these commitments are still at an early stage and are voluntary,and that delivery on net-zero commitments will require a joint effort from the public and the private sector and will depend on actions taken at the entity l

321、evel and in the aggregate.Accordingly,the recommendations include voluntary actions targeted at private sector FIs,market alliances,governments,international organizations,and networks,acknowledging that depending on entitys readiness,these recommendations could be considered and implemented at diff

322、erent paces.The SFWG will continue discussing challenges and progress with the implementation of FIs voluntary commitments to further enhance credibility gradually.Recommendation 7:Provide publicly available,consistent and comparable information on metrics,scenarios,methods,and benchmarks used to se

323、t targets.FIs that have committed to a net-52 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group zero target should monitor and disclose a consistent,comparable,and reasonable range of metrics in a consistent and comparable way to assess progress in implementing n

324、et-zero strategy and priorities(e.g.,targets for GHG emissions or intensity reductions;support and scaling of climate solutions and sustainable finance;transparency on engagement strategies;portfolio alignment metrics such as implied temperature rise,internal implementation,and where relevant,retire

325、ment of GHG-intensive assets).Information should be interpretable and supported by up-to-date science,with transparency on the methodology used and consistent with data availability over time.Recommendation 8:Report annually on institutional progress and provide information on any gaps or challenges

326、 to meeting targets.Institutions that have voluntarily committed to a net-zero target should establish efficient processes for internal monitoring and for external reporting on progress and any possible corrections.FIs that have voluntarily committed to a net-zero target should also commit to revisi

327、ting and,if appropriate,revising interim targets and pathways based on evolving market dynamics,technological developments,current policy environment,and shifting abatement cost curves.These FIs should provide publicly available information that clearly explains any adjustments to interim targets an

328、d pathways.These FIs are encouraged to share implementation experiences and lessons learned,to encourage clear-eyed assessment of progress against targets.FIs can support efforts to track progress by engaging with relevant initiatives and providing transparent,credible,and comparable information at

329、the FI level.Recommendation 9:Work together to encourage accountability,share lessons learnt,and address common challenges,including through joint initiatives of FIs that have made net zero commitments.FIs that have voluntarily committed to a net-zero target should learn from one another through dis

330、cussion and share detail of tools,data,and methodologies used,as appropriate,to enhance comparability across FIs and suitability to local contexts and 53 2022 G2 0 S U S T A IN A B LE FIN A N C E R E P OR T Sustainable Finance Working Group considerations,and to enable and accelerate delivery on net

331、-zero commitments.These initiatives should support comparability,which will advance efforts to track progress in the aggregate and drive further momentum and accountability.Recommendation 10:Governments and international organizations and networks could,as appropriate and applicable,consider measure

332、s to enhance the accountability and comparability of financial sector net-zero commitments in a manner consistent with their mandates and objectives as well as local laws and regulations,recognizing the voluntary nature of such commitments.National authorities and regulators could consider,within th

333、eir mandates,some form of progress monitoring on regulated FIs,encourage the use of comparable parameters to report on and monitor,support domestic or cross-border data platforms to serve both regulators and financial market participants.International organizations and networks could continue to work towards more comparable technical approaches,methodologies,and metrics for net-zero target-setting