Governing Finance for Sustainability – Advancing the Debate

As highlighted by Benoît Cœuré from the ECB in his keynote on “Monetary Policy and Climate Change” last November, there is an accelerating momentum to move sustainability up financial market agendas worldwide. A key aspect of this development is the growing acceptance that the linkages between finance, social cohesion and environmental stability are also a matter for those setting policies and frameworks for the financial system – in particular central banks and financial regulators.

In parallel, the growing influence of central banks and regulators in response to the financial crisis has triggered debates whether the prevailing consensus on their mandates, governance and instruments remains fit for purpose. Questions around their objectives and targets, their independence and accountability, as well as their capacity to deal with a world that is radically different from the days when the current consensus was forged are illustrations for that.

Against this background, we believe we are at an inflection point where past convictions on central banking and financial regulation are reviewed and where we have a significant opportunity to make sustainability a cornerstone of a new institutional architecture for the governance of financial markets that may emerge.

We have started building a global community of thought leaders to explore and seize this opportunity with an initial roundtable in January 2019. Since then we have been carefully following the debate on governing finance in what we increasingly perceive to be a four-way nexus between growing risks in today’s financial and monetary systems, the power of central banks and financial regulators and challenges to that from many quarters, the rapidly growing relevance of sustainability considerations in governing finance, and the potentially disruptive impact of fintech.

With this in mind, we have embarked on the next phase of this initiative to expand the community, deepen the knowledge base and advance the debate. The meeting on 8-9 July provided an important platform to target this objective.