UNEP Inquiry releases its third progress report

Pathway to scale

January 21, 2015

The United Nations Environment Programme (UNEP) has published the third progress report for its Inquiry into the Design of a Sustainable Financial System. The report, Pathways to Scale, explores how innovative ideas and practices can be made more effective, adopted more widely, and taken to sufficient scale to mobilise the trillions of dollars required to make the global financial system more sustainable.

In this interim report, the inquiry profiles innovations in five areas.

Four are related to pools of financial assets:

  • Banking (US$139 trillion): Banks hold the largest pool of global financial assets, and developing countries’ leadership in green credit regulations points to a new phase in international banking standards.
  • Bond markets (US$100 trillion): The largest capital market and fastest moving theme, seeing green bonds expanding rapidly and credit ratings starting to integrate sustainability factors.
  • Institutional investment (US$93 trillion): The arena of greatest commitment to date, and where a focus on capital allocation, investor governance and market incentives could pave the way for the next phase.
  • Central Banks (US$24 trillion): Central banks’ monetary decisions, including balance sheet policies, have the potential to marry stability and sustainability, although some measures remain controversial.

Plus one policy tool:

  • Resilience and systemic risk: Introducing environmental stress tests could be one way to address short-termism over issues such as natural disasters, air pollution, resource security and climate change. (In November 2014, the PRI and UNEP Inquiry jointly issued guidance for investors on public policy engagement).

The report also identifies a series of policy milestones throughout the coming year that will provide opportunities to combine financial reform with sustainable development.

These include four UN events:

  • Disaster Risk Reduction conference (Sendai, March)
  • Financing for Development conference (Addis Ababa, July)
  • Finalisation of the new Sustainable Development Goals (New York, September)
  • Completion of a new global agreement on climate change (Paris, December)


  • G7 summit (Elmau, June)
  • G20 summit (Antalya, November)

About the UNEP Inquiry into Design Options for a Sustainable Financial System

The UNEP Inquiry into Design Options for a Sustainable Financial System, now entering the second half of its two-year work programme, was created to explore emerging changes and reforms to the financial system that would improve its alignment with sustainable development. Its investigations to date have revealed many innovations in financial and monetary policy, regulation and financial market standards. A notable feature is the leading role being taken by some developing countries, where policymakers are evolving new approaches to bridging financial and longer-term development objectives.

Its first two reports are available here:

During 2015, the inquiry will complete its programme of research and engagement at the country and international levels. It will co-host its final round of new country meetings in Colombia, Kenya, Indonesia and Switzerland, and work with a range of international partners on issues such as environmental stress testing, bond markets, insurance policy, institutional investment and fiscal policy.

Its final report containing recommended policy options will be presented in October 2015.