The world is facing a cluster of complex and interrelated challenges: climate crisis, ecosystem collapse, extreme poverty, and a global population forecast to reach 9.7 billion by 2050. These social and environmental threats require action from the finance sector.
Finance plays a central role in society, providing services to investors, borrowers, and lenders to ensure proper risk management and efficient allocation of capital. Now, by aligning with climate goals, it could also help to deliver new jobs, mitigate climate change, improve public health, enhance monetary resilience, and more.
Finance organizations need transformational change – not only to fulfill this critical role, but also to grasp the opportunities signaled by public concern about the impact of their own investments, and by increasing consumer demand for green financial products and services.
However, how should financial organizations go about this?
There is a growing number of financial products and services out there that claim to be sustainable. However, no global standards cover sustainable finance in its totality and provide assurance of the sustainability credentials of such products and services.
Companies are struggling with basic issues, from no common definitions and approaches, a lack of transparency and detail in existing approaches that some subscribe to, to a lack of consistent practices and guidance on integrating sustainability and environmental, social, and corporate governance considerations in financial decision-making.
The UK is a global leader in green finance. As the UK’s National Standards Body and a global standardization leader, BSI is well placed to develop a set of robust, internationally relevant sustainable finance standards.
These standards, developed in collaboration with a vast stakeholder community and building upon existing effort and initiatives, will support financial organizations globally in aligning themselves with, and working towards, the UN Sustainable Development Goals.
This will be the first step to shifting sustainable finance into the mainstream.
A robust set of sustainable finance standards will increase business confidence and understanding of sustainable investments and related activities.
Armed with this knowledge, BSI has released PAS 7340:2020 Framework for embedding the principles of sustainable finance in financial services organizations – Guide. The new guide provides a framework for financial services organizations that wish to be sustainable and better aligned with global initiatives like the United Nation’s Sustainable Development Goals (UN SDGs) and the Paris Agreement.
It aims to facilitate shared understanding and collaboration in the global finance sector around sustainability. The framework recognizes that transformation is needed to equip the industry to address issues including poverty, inequality, climate change, environmental degradation, prosperity, peace, and justice.
The free-to-download PAS provides common terminology and a set of principles to help organizations identify, develop and maximize opportunities that address sustainability challenges.
The development of standards such as this helps to accelerate understanding, and therefore, the growth of sustainable finance. They provide reliable mechanisms for mobilizing finance globally to address pressing social, environmental, and economic issues.
These new standards will provide businesses and financial institutions with a clear framework for ensuring their strategies, products, services, and processes are aligned with the transition towards cleaner, more sustainable economic growth.
The impact of this work is to increase confidence in sustainable investments such as funds, but also in how financial organizations, including investment managers, are integrating sustainability factors into their decision-making. This will help drive confidence and transparency and ultimately, the level of investments going into sustainable projects.
Over 100,000 more internationally recognized standards are available for simple and flexible access with a BSI Knowledge subscription. When facing the pressure of increasing your positive outcomes for the benefit of future generations, our subscription service puts the control in your hands. With traceability to monitor and demonstrate your business's compliance to standards and self-serve functionality that enables you to manage your standards, users can access standard content quickly and simply. Request to learn more.
Download the free PAS 7340:2020 Framework for embedding the principles of sustainable finance in financial services organizations – Guide here.