A “shared language” for green and sustainable finance is critical for the growth of new markets, and for compatibility and coherence between jurisdictions, the FC4S Network – the world’s platform of leading financial centres working on sustainability – said in a joint statement released after a G7 meeting on sustainable finance in Halifax.

The Network said new definitions, standards, and classification systems for sustainable finance should be developed to avoid confusion among policy and regulatory authorities and a real risk of increasing transaction costs for financial institutions seeking to provide sustainability-related products and services.

Importantly, several processes to develop “taxonomies” for sustainable finance are currently planned, or already underway – including the establishment by the European Union of a Technical Expert Group to develop a clear classification of economic activities and sectors which can be branded as “sustainable”.

To help achieve convergence, the statement sets out ten principles including the scope, purpose, good practice, proportionality and mechanisms of the taxonomies.

The statement – launched at a high-level Roundtable meeting on the eve of the 2018 G7 Environment, Energy, and Ocean Ministers’ meeting in Halifax – represents the continuation of G7 work on sustainable finance initiated by the Italian Presidency, where cooperation among financial centres was endorsed and encouraged. The Network itself was then launched by UN Environment in Casablanca in September 2017 with a mission to exchange experience and take common action on shared priorities to accelerate the expansion of green and sustainable finance.

Speaking at the Roundtable meeting, the Honourable Catherine McKenna, Canadian Minister of Environment and Climate Change, said: “The transition to a sustainable global economy represents a $26 trillion economic opportunity. Financial centres play a significant role in shifting capital to sustainable investment. As host of the G7 Environment, Oceans and Energy Ministers Meeting, Canada welcomes the leadership of the Network of Financial Centres for Sustainability in developing these ten principles, which are an important step to advancing sustainable finance and shifting billions to trillions of dollars to clean investment across the globe.”

Jennifer Reynolds, President and CEO of Toronto Finance International, said: “Toronto is North America’s 2nd largest financial centre and has the opportunity to develop a leading hub for green and sustainable finance – we are proud to have been a leading contributor to the development of this statement. Clear and coherent language for sustainable finance is key if we are to move from niche to mainstream – and this statement sets out how to coordinate this evolving environment.” 

Francesco La Camera, Director General for Sustainable Development and International Affairs of the Italian Ministry of Environment, said: “It is remarkable how far the FC4S Network has come since its endorsement by the G7 in Italy last year – bringing in more than ten leading international centres to shape a new agenda for public-private collaboration. We are proud to support the Network as it continues to grow.”

Erik Solheim, Executive Director of UN Environment said: “UN Environment works across the sustainability and finance agenda – and I can recognize that the FC4S Network is having a significant impact on the international policy sphere. I hope G7 nations can now take these principles forward by applying them in their own domestic processes.”

Nick Robins, Senior Advisor on Sustainable Finance, said: “These ten principles are an important foundation for the technical discussions that market and policy institutions will face together – and we hope that the FC4S Network can serve as a platform for dialogue on these challenging issues.”

The FC4S Statement, “Building Shared Language for Green and Sustainable Finance”, can be found here. The Briefing accompanying the statement can be found here.