Chapter 3 of the October 2021 Global Financial Stability Report analyzes the role that the global investment fund sector can play to support the urgently needed transition to a green economy, as well as the risks to the sector arising from this transition. It documents that the sustainable fund segment has stepped up its climate stewardship and increases the availability of private capital to firms with a more favorable sustainability rating. However, even though sustainable funds have been growing rapidly, they are still too limited in size and scope to make a difference. The chapter’s findings suggest that policymakers should strengthen the global climate information architecture to foster climate finance markets, ensure proper regulatory oversight to prevent greenwashing, and conduct scenario analysis and stress testing to mitigate financial stability risks.
- Fabio Natalucci, Deputy Director, Monetary and Capital Markets Department, IMF
- Felix Suntheim, Financial Sector Expert, IMF
- Jérôme Vandenbussche, Deputy Division Chief, IMF
- Sonja Gibbs, Managing Director and Head of Sustainable Finance, IIF