Work Streams

Policy dialogue

Policy dialogue and public-private investment strategies

Financial institutions, like any other private sector entities, will only systematically integrate climate change factors into core business activities - be it in risk management, new product and market development or in strategic considerations around institutional positioning - if these factors are considered to be financially relevant, in other words material.

The international policy dialogue work of UNEP FI’s Climate Change Working Group aims to sharpen the financial materiality of climate change by promoting an international climate change regime as well as international and domestic policies that firmly put the issue of climate change on the agendas of financial institutions. It serves as a platform for the global financial services industry to formulate and communicate its policy needs and priorities to better align broader climate change mitigation and adaptation objectives with commercial business interests. The CCWG has always had a strong presence at the annual Conference of the Parties as part of the UNFCCC and Kyoto processes.

Policy areas addressed include:

• Carbon markets: the design, breadth and depth of domestic (cap & trade schemes) as well as international carbon markets (project-based, flexible mechanisms such as CDM and JI as well as other voluntary and upcoming crediting schemes).
• Risk reduction, -management and transfer: the role of the private insurance industry in global adaptation efforts in the management, - reduction and -transfer of climatic risks, particularly with regards to vulnerable communities in developing countries.
• Public finance mechanisms: the design, introduction and deployment of public support mechanisms aimed at mobilising - beyond the scope of existing carbon markets - private finance and institutional investment towards mitigation and adaptation activities, particularly in developing countries.

A need for leadership and political certainty

A key message of the CCWG is that although financial institutions should be taking a more proactive role, an absolute prerequisite is strong government leadership on adaptation and mitigation measures. In order for market-based solutions to thrive government has to provide financial institutions with the necessary regulatory architecture. The most important thing governments can do is provide long-term political certainty on regulations, to show the financial services industry that climate change warrants the commitment of valuable time and resources.

Partnerships: speaking to governments with one loud voice

The international policy dialogue is undertaken in partnership with a range of investor, finance and insurance networks:

• In the realm of institutional investment, UNEP FI cooperates with the Europe-focused Institutional Investors Group on Climate Change (IIGCC), the North American Investor Network on Climate Risks (INCR), the Australian / New Zealand Investor Group on Climate Change and the UN-backed Principles for Responsible Investment.
• In the realm of insurance, UNEP FI cooperates with the Munich Climate Insurance Initiative (MCII), Geneva Association, and ClimateWise.

Current Projects

1. International Investor Coordination on Climate Change Policy
2. International Insurance Coordination on Climate Change Policy
3. Research Project: Forests for Mitigation and the Financial Services Sector
4. Partnering with the World Climate Summit
5. Formal Side Event at COP16
6. Co-convening the Pan-African Carbon Bankers Forum
7. Study on the climate change data needs of financial institutions