Sustainable finance needs a harmonized and sound policy and regulatory framework that ensures clarity of purpose, protects consumers, supports market development, and facilitates transition in key economic sectors. Given the global nature of the climate change agenda, global leadership is essential to encourage the development of well-aligned and considered regulatory and supervisory frameworks across jurisdictions.
However, signs of fragmentation around climate risk assessment are already evident — notably in the areas of prudential regulation and supervision, market and conduct regulation, taxonomy and disclosure. The aim of this IIF staff paper is to highlight examples of fragmentation that have already emerged, and to suggest ways forward that would increase international alignment.
We would urge policymakers – including the G20, global standard setters and networks such as the NGFS – to consider setting up specific and dedicated mechanisms for greater alignment.