Year of green finance nurturing economy

Finance ministers and central bank governors from G20 countries will meet in Shanghai under the leadership of the Chinese presidency. With so many issues on the table for the G20 to deliberate this year, it is telling that the Chinese presidency has chosen to prioritize green finance. This is a topic that is key to ensuring the global economy's transition toward a more sustainable, inclusive pathway. It is also relevant in securing the underlying resilience and effectiveness of financial markets.

Last year, the international agenda on sustainable development and climate change achieved political consensus, with 193 countries committing to 17 Sustainable Development Goals. And at the Paris climate change conference, a historic accord was reached on how the international community could together address climate change and its impacts. While the consensus and impetus for change is truly unprecedented, this alone is not enough to realize our collective objectives. Significant barriers need to be overcome in implementing these agreements, of which securing the necessary finance is among the most challenging.

Transitioning to an inclusive green economy will require the type of support that only the financial system can provide. UN figures show that some $5 to 7 trillion will be needed every year to achieve the agreed global goals. Governments can only provide a small portion of this funding, with the bulk needing to come from private savings, essentially from banks and investors.