Decoding Net-zero for Financial Institutions in emerging markets: Recommendations to Financial Regulators & Gender-Responsive Transition Finance Framework
Guest article on the launch of the report Decoding Net-zero for Financial Institutions in emerging markets: Recommendations to Financial Regulators & Gender-Responsive Transition Finance Framework by autusESG with support from the UK FCO.
The shift towards net-zero emissions is an
unparalleled imperative in emerging markets. The financial sector, through its
economy-wide implications offers unprecedented opportunities for catalyzing
socio-economic growth while mitigating the pressing challenges of climate
change. auctusESG and the UK Foreign, Commonwealth & Development Office (FCDO)
released two highly relevant reports with an objective to support regulatory
decision-making and provide crucial inputs to the G20 forum. The reports encompass insights from practitioners,
subject matter experts, and a thorough review of literature.
The key takeaways from the report on net-zero
highlight that emerging markets with unique economic structures are at varying
stages in climate transition. This requires context-specific solutions. To this
end, auctusESG makes adaptable recommendations for transitioning to a net-zero
emissions economy (Figure.1).
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Figure.1. Decoding Net-zero for Financial
Institutions in emerging markets: Recommendations to Financial Regulators |
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Recommendations to banking regulators |
Recommendations to capital market regulators
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The second report on Gender
Responsive Transition Finance drives gender perspectives on the transition
narrative of net-zero. It centers on aspects of justice, equity and fairness
for women affected by coal transition. The report discusses a guidance framework
with four key pillars: gender-just transition policies and regulations; the
role of financial institutions; alternative finance mechanisms; and
women-centric community interventions (Figure.2). The framework, grounded in
ILO’s paper on social protection for a just transition, may be tailored and
weaved into decarbonization plans across markets.
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Figure.2. Gender-Responsive
Transition Finance Framework Four pillars of the proposed GRTF Framework  The report launch was followed by an insightful panel discussion with international experts from both industry and academia.  The discussions on net-zero underscored the need to deploy
effective risk covers and innovative financial instruments to attract private
investment. At the same time, overcoming the inertia within the financial
sector is an important step to revamp finance for net-zero. In this regard, curbing
misdirected incentives, taxing externalities, and maintaining high
qualification standards would ensure competence, for accurately risk-weighted
assets and alignment with a low-emissions economy. The
panellists also drew on the linkages between net-zero and just transition,
suggesting a gender-lens integration into existing institutional mechanisms. Policy
reforms; investment planning at sub-national and enterprise level; and
institutional capacity building, are few key action areas for strengthening
just transition narratives. To this end, documenting the successes and failures
of transition in other sectors is critical. Further, supporting women
representation in the transition to a low-carbon future through structural
reforms is an important way forward.
The event observed a wide representation across geographies,
including South-East Asia, India, Europe, and the US. Conclusively, the session provided valuable
insights on regulatory action for net-zero risk reduction and financial
stability, unlocking private sector finance, and the need for GRTF integration
in policies to accelerate financing for an orderly, just, inclusive transition. To download the reports, visit Reports
Event
recording available at Virtual Reports
Launch || auctusESG & UK FCDO |
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