The FINANCIAL -- An unprecedented number of the world’s leading financial institutions from across the globe have joined the World Bank Group and other multilateral development banks in signing onto new principles to integrate climate change into their financing and operations.
All together 26 financial institutions from developing and developed countries with combined balance sheets of more than US $11 trillion signed on to the voluntary Principles to Mainstream Climate Action within Financial Institutions, pledging to integrate climate considerations into their investment and advisory functions, according to the World Bank.
“As one of the financial institutions adopting these principles, which together account for US$11 trillion under management, we believe these principles will help us better serve our private and public country clients,” said Rachel Kyte, World Bank Group Vice President and Special Envoy for Climate Change. “Integrating climate risk more fully into decision making, and driving the new clean energy and resilient infrastructure investments are critically needed. “
These principles lay out a clear pathway for financial institutions to integrate climate change into their operations with the aim so they can deliver better, more sustainable, short and long term results, both developmentally and financially.
They lay out five measures for integrating climate action within financial institutions– a commitment to climate strategies; managing climate risks; promotion of climate smart objectives; improving climate smart performance and accounting for climate action.
These five principles have been developed based on practices implemented by financial institutions worldwide over the last two decades. A related publication on Emerging Practices linked to these principles was also released today, and illustrates some of the many ways financial institutions currently integrate climate change considerations into their core activities, and provides key lessons of experience, including the usefulness of climate risk screening, and the development of common metrics for mitigation and adaptation finance.
The principles were initially developed by a group of multilateral development banks and several members of the International Development Finance Club (IDFC), a network of national, regional and international development banks. This group was then joined by other public and private financial institutions worldwide.
For its part, the World Bank Group has been mainstreaming climate change into all its operations in its fund for the poorest countries, IDA, the International Development Association.