Capital markets can have a decisive impact on the level and direction of sustainable investment and can contribute towards filling the financing gap for the SDGs.
UNCTAD estimates that the value of sustainability-themed investment products amounted to $5.2 trillion in 2021.
However, sustainable finance is still in its early growth stage, with sustainable mutual fund assets representing 4% of the global fund market and green bonds representing just 1% of the global bond market. Moreover, most sustainability-themed investment products are domiciled and invested in developed economies, and most are “self-labelled”, raising concerns about sustainability washing and consistency of standards.
With a vision to build a future global financial ecosystem in which sustainable development, as defined by the UN’s Sustainable Development Goals (SDGs), is fully embedded into the business model and investment culture and to bring more credibility, transparency, and consistency to the market, UNCTAD launched the UN Global Sustainable Finance Observatory (GSFO).
The Observatory promotes and facilitates the transition of sustainable investment from market niche to market norm, leading up to 2030 and beyond. It addresses the challenges of fragmentation in standards, proliferation in benchmarking, complexity in disclosure, and sustainability washing concerns.
We work in tandem with the standards setting processes of the financial industry and regulatory bodies, as well as other international organisations, data providers and investors to promote the full and effective integration of sustainable development into all aspects of the global financial ecosystem.