Source: TFI Newsletter October 2018 Edition
The global transition to a low-carbon economy is providing an opportunity for financial centres to play a leading role in unlocking the potential of sustainable growth. An estimated investment of US$500 billion per year between now and 2030 will be required in order to keep global warming under 1.5° Celsius and the financial sector has a significant role to play.
Sustainable finance is on the rise. In recent years, there has been a significant global increase in green equity and bond issuances, the integration of environmental, social and governance (ESG) factors into investment decision making, the understanding and disclosure of carbon exposure and climate risk, and the incorporation of environmental risks into market supervision.
North America’s second largest financial centre
In September, TFI released a report, Capitalizing on Sustainable Finance: A growth opportunity for Toronto's financial sector, which explored the potential for Toronto, and Canada more broadly, to develop a leadership role in sustainable finance.
The TFI report estimates that the annual value of the sustainable finance opportunity for Canada's financial sector is at least $27 billion and could be as high as $110 billion annually by 2025. As North America’s second largest financial centre, Toronto is well-positioned to develop and expand its expertise and talent in sustainable finance and capitalize on this economic opportunity.
Clear and coherent language for sustainable finance is critical
One of the recommendations from the report was a need to develop a common language for sustainable finance. At the September G7 meeting of Environment Ministers, an International Network of Financial Centres for Sustainability (FC4S), which TFI is a member of, released a joint statement on how new definitions, standards, and classification systems for sustainable finance should be developed. Clear and coherent language for sustainable finance is critical to developing a robust and liquid market and the statement sets out how to coordinate a global approach.
TFI will continue to work with its members and other stakeholders to help develop Toronto as the North American hub for sustainable finance. Visit our website to find out more about sustainable finance and TFI's initiatives.