AFI/G-24 meeting spotlights need for inclusive approach to implementing global sustainable finance standards

This week at the IMF-World Bank Spring Meetings, central bank governors from AFI and the Intergovernmental Group of Twenty-Four (G-24) met with global standard-setting bodies (SSBs) and International Organizations to discuss the importance of a more inclusive and proportionate approach to the implementation of global green financing standards.

“This is the first time leaders from the Global South sit down with global standard-setting bodies to discuss sustainable and green finance measures,” said Ilya Sverdlov, AFI’s Director of Global Partnerships. “It’s incredibly important that emerging markets form part of this discussion on global standards formulation and implementation. They are among the hardest hit by climate change and their perspectives are critical to global economic stability. We are glad that AFI and the G24 can provide a platform for this important deliberation.”

As part of the international response to climate change, SSBs are starting to adopt and implement new global standards for sustainable financing. While these standards are essential for creating greener economies, there is a need to ensure that sustainability does not come at the expense of inclusion.

“Global sustainable finance standards need to be proportionate – recognizing the diversity of countries’ unique circumstances, stressed Robin Newnham, AFI’s Head of Policy Analysis and Guidance. “This is particularly the case for already disadvantaged consumer segments, themselves acutely vulnerable to the effects of a warming planet.”

G24 Director Dr. Iyabo Masha, moderated a panel on the evolving landscape in global sustainable finance standards, with participation from the Financial Stability Board, the Financial Action Task Force, the International Monetary Fund, and the World Bank Group. Speakers agreed that – while sustainable finance is necessary for true financial resilience – standards will only be effective if they are both proportionate and interoperable. Capacity building can boost proportionate implementation by helping countries make use of the flexibility within the standards.  

In the second part of the discussions, Superintendent Margarita Hernandez of SEPS Ecuador, Governor Jameel Ahmed of the State Bank of Pakistan, and Governor Nandalal Weerasinghe of the Central Bank of Sri Lanka outlined how Inclusive Green Finance (IGF) can provide countries with the tools needed to implement more proportionate global green finance standards.

Pioneered by AFI, IGF is designed to help governments, policymakers and regulators keep low-income populations afloat in the face of climate change. It gives vulnerable businesses and communities access to emergency government assistance, green insurance to protect against climate crises, and green credit to invest in more sustainable business practices.

“IGF prioritizes the needs of those hardest hit by climate change and recognizes that the transition to a green economy cannot leave anyone behind.  Proportionate application of global financial standards opens the door for inclusive green finance policies which empower vulnerable communities and support financial and price stability,” stressed Sverdlov.

“Collaboration is essential to advancing IGF,” said Ellen Joyce L. Suficiencia, representing the Bangko Sentral ng Pilipinas – a member of AFI and current Chair of the G-24.  “We need to work together to develop responsive policies, address market gaps like robust data infrastructure, and build the capacity of ecosystem players and regulators. By building on each other’s progress, experience, and diverse perspectives, we can deepen our understanding of inclusive sustainability faster than going at it alone.”

AFI’s commitment to IGF

AFI members endorsed the Sharm El Sheikh Accord at the 2017 AFI Global Policy Forum, with a renewed pledge in 2022. It commits AFI members and partners to identify and implement environmentally friendly financial inclusion policies focused specifically on communities most vulnerable to climate impacts.

In 2022, at the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP27) in Sharm El Sheikh, Egypt, members of the AFI network launched a first-of-its-kind IGF Roadmap to encourage multi-stakeholder cooperation in boosting inclusive green finance globally.
At the UNFCCC COP28 in Dubai, AFI members put IGF firmly on the global agenda with an insightful AFI-hosted panel discussion. Finally, during the 2023 IMF-World Bank Spring Meetings, AFI leaders and private sector partners met to discuss ways of advancing IGF and expressed a strong interest in further collaboration on the topic.

Building on this momentum, AFI intends to expand its engagement across the inclusive finance ecosystem, particularly with SSBs and the private sector, to ensure Inclusive Green Finance reaches the most vulnerable populations.