In 2015, world leaders agreed on ambitious targets to reduce greenhouse gas emissions through the Paris Agreement on Climate Change and a 2030 global development agenda through the UN Sustainable Development Goals. To contribute to these global goals, several industry groups in Norway developed roadmaps for green competitiveness in 2016. In this vein, the Norwegian financial sector has produced its own roadmap, catalysing a shared ambition on its role in supporting the transition to a low-carbon, sustainable Norwegian economy.
The Roadmap for Green Competitiveness in the Norwegian Financial Sector, developed by Finance Norway, the country’s association of financial institutions comprising banks, insurers, investment firms and pension providers, sets the vision of a profitable and sustainable Norwegian financial sector in 2030.
With an ambitious yet realistic vision, it outlines recommendations for the financial sector and the authorities to achieve this vision and support Norway’s transition to a low-carbon economy.
“Norwegian business will be affected by climate change, economically, physically and through regulation. The financial sector is exposed to climate risks through risks in finance, a changing environment for insurance risk, and effects on investment. We must build knowledge and adapt our own businesses and strategies to the changes. Since we are specialists in risk assessment, it is our task to support the transition to a low-carbon economy,” said Idar Kreutzer, CEO of Finance Norway.
The roadmap has seven general recommendations. These include establishing a common taxonomy for sustainable finance; aligning climate reporting with the Financial Stability Board’s climate risk disclosure recommendations; increasing climate competence and capacity in the financial sector; including climate risk in the Norwegian financial supervisory authority’s mandate; improving collaboration between the financial sector and the authorities; using digitalisation to scale up the market for climate-smart solutions; and contributing to innovation and change in other sectors. Furthermore, the roadmap provides specific recommendations for core business activities of banks, insurers and investors.
“By producing a sustainable finance roadmap, the Norwegian financial sector has taken a major step towards a financial system that supports economic, social and environmental sustainability. Implementation is the next step,” said Butch Bacani, who leads UN Environment’s Principles for Sustainable Insurance Initiative (PSI), the largest collaborative initiative between the United Nations and the insurance industry. “National associations spanning the banking, insurance and investment industries around the world have a key role to play in tackling climate change and supporting sustainable development. Finance Norway’s sustainability leadership is a shining example of how this can be done.”
Bacani spoke at Finance Norway’s sustainability conference last year and proposed the idea of Norway developing a sustainable finance roadmap. Finance Norway is a PSI member and contributes to key PSI initiatives, including climate and disaster risk management and urban resilience and sustainability, and in major PSI events that set the global agenda for the insurance industry and sustainable development.
The aims of the roadmap are to:
- Inspire the financial sector itself, the authorities, other stakeholders and society by presenting the potential of a profitable financial sector that contributes to the low-carbon transition
- Spread information about the role of the financial sector today and in the transition to the low-carbon economy
- Serve as a platform for dialogue and collaboration on climate issues in the financial sector, and a starting point for decision-making and policy-making
In developing the roadmap, Finance Norway carried out a comprehensive consultation process involving its members, consumers, financial sector initiatives, business and industry, government, environmental organisations, and other key stakeholders.
Finance Norway is seeking to unite the Norwegian financial sector behind the roadmap’s ambitions, which includes initiating collaboration within the sector, with the authorities and other stakeholders; engaging in dialogue with the European Union; and monitoring progress towards the roadmap’s vision.
“Through guidance, requirements and expectations, we can contribute to reducing climate risk while creating new business opportunities. This creates value for the financial sector, for our clients and other stakeholders, and for society as a whole. The roadmap represents a targeted increase in climate efforts by the financial sector and its stakeholders until 2030,” concluded Idar Kreutzer.
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About Finance Norway