Meeting of non-G20 Developing Countries on Green Finance Sector Reform

Date: 06 Apr 2016

The relevance of “Green Finance” has been steadily growing over the past two years, and has now emerged as a central topic underpinning both the new policy dynamic promoting sustainable development and, increasingly, market practice in support of financial market development. The growing prominence of Green Finance is framed by the scale and urgency of financing aspects of international sustainable development and climate-related agreements reached in 2015, and the realization that only a fraction of this can realistically come from public sources. Green Finance reached a new height with the establishment of a green finance work stream under China’s presidency of the G20 in 2016. This meeting will explore green finance through the concerns, experience and needs of developing countries, enabling such perspectives to inform on-going assessments and developments, including the G20 Green Finance Study Group.

Developing countries have particular concerns and needs, especially those vulnerable to environmental risks and seeking to transition towards less resource-intensive economies. Most have underdeveloped financial markets, and considerable dependence on international financial flows for longer-term infrastructure investments. Further, greening financial markets, whilst opening new financing opportunities, could increase financing costs to some developing countries with greater climate vulnerability or a current dependence on carbon or natural resource-intensive development. Finally, linkages between environmental outcomes on the one hand, and broader economic and social outcomes on the other, very often cannot be ignored.

At the same time, some developing countries have taken leadership in driving innovations in financial markets in pursuit of sustainable development. Developing country central banks have led, for example, in adopting sustainable development principles and establishing related guidelines and in some instances regulatory requirements, linked often to fiscal and other forms of public support. Fintech, although at an early stage, has underpinned “leapfrogging” by some developing countries, notably in catalysing financial inclusion through the rapid advance of mobile payment platforms, but also in ways that have encouraged the development of green financing.

The goal of the meeting of Non-G20 Developing Countries (nG20DCs) is to help draw out and articulate a voice from a wide range of developing countries, representing a wide spectrum from middle-income countries with developed financial markets and countries from less developed parts and to offer a vehicle through which this voice might feed more effectively into the global debate on green finance sector reform, both through the G20 and through other channels.