Promoting a green and socially inclusive financial market

Context

Achieving the climate and sustainable development goals requires massive investments in an ecological transformation of the economy, which also take social inclusivity into account. The financial sector has a key role to play in this process as it can facilitate redirecting public and private capital into socially and environmentally sustainable investments. Moreover, it plays a vital role in mitigating social, environmental and climate-related risks for society and the economy.

Although Brazil has made significant progress in the regulation of its financial sector, the framework conditions are still insufficient for the required transition. The sector lacks clear definitions, rules and incentives for expanding sustainable investments at the speed and scale needed. Strategies and actions to assess and address social, environmental and climate-related impacts and risks of financial activities, and to ensure transparency, remain limited.

Objective

The financial sector in Brazil is better aligned with social, environmental, climate-related and economic sustainability objectives.

Approach

The project provides technical assistance for fostering the political and regulatory framework conditions for a sustainable financial sector in Brazil. It promotes skills development and supports in devising and applying effective supervisory instruments. The project also disseminates knowledge about sustainable finance approaches.

Key measures include:

• Developing a classification system (taxonomy) for sustainable economic activities and investments,
• Improving climate risk analysis in financial monitoring and supervision and for monitoring environmental compliance in rural credit operations,
• Promoting and disseminating sustainable finance approaches,
• Promoting knowledge and approaches for a just transition in finance.

Last update: December 2024