The shape of today’s financial system is a result of many historical choices. There was never a blueprint, certainly, but the system was formed by changing societal needs and expectations, associated policy decisions and the dynamic response to arising opportunities by market actors.
Progressing a sustainable financial system may improve the efficiency, effectiveness and resilience of the system itself. Measures to align the financial system towards environmental risks and sources of value, taken one by one, are unlikely to protect society from other financial system weaknesses that enable instability.
International cooperation can support national action. The increasing internationalization of national financial systems makes international cooperation a critical support in embedding sustainable development into financial decision making. Fortunately, there are already many venues for such cooperation and initiatives underway.
Mobilizing the world’s capital is essential for the transition to a sustainable economy. Today, however, too little capital is supporting the transition, and too much continues to be invested in a resource-intensive economy. Much of this innovation has taken place at the national level, providing the platform for new forms of international cooperation. This pairing of national-level innovation with international frameworks provides the opportunity to create a new pathway for promoting sustainable finance.
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