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Can the international trade system be a catalyst for reforming fossil fuel subsidies (FFSs) to help relieve the burden on the public purse, reduce local and global air pollution, improve energy security and tackle climate change? 

From instituting carbon taxes to strengthening social and economic resilience, finance ministers have access to a wide range of policy instruments with which to manage the effects of climate change.

A lot has been said about the surprise results coming in from recent elections and referendums across the globe, and many point to the same thing: growing dissatisfaction and disenchantment with the status quo.

Finance, encompassing public and private activities that deal with the allocation of credit and capital resources, serves as a critical driving force for real economic growth. The transition to an inclusive green economy, in particular, will be capital demanding. However, the current financial system often fails to take into account the long-term social and environmental impact of certain economic activities, resulting in underinvestment in green sectors and overvaluation of environmentally damaging assets such as the fossil fuel industry.

In response to the gap between the capital resources needed and current investment flows, endeavors are being made to align the financial system with the needs of green growth. The UNEP Inquiry results, released in late 2015, demonstrate a growing trend in policy innovation from central banks, financial regulators and standard setters, in both developed and developing countries, who are incorporating sustainability factors into the rules that govern the financial system. Additional research and understanding will help the international financial system prioritize the green economy agenda and propel green growth.

Relevance to the SDG

Sustainable Development Goal 1, target 1.4, calls for increasing access to appropriate financial services, including microfinance, to poor and vulnerable population. In addition, SDG 10 target 5 calls for improvements in regulation and monitoring of the global financial system.

SDG 1.4
   SDG 10.5
Sustainable Financial System


Learning Products

Partnership for Action on Green Economy (PAGE)
The Frankfurt School - UNEP Collaborating Centre for Climate & Sustainable Energy Finance


Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Partnership for Action on Green Economy (PAGE), United Nations Environment Programme (UNEP), International Labour Organization (ILO), United Nations Development Programme (UNDP), United Nations Industrial Development Organisation (UNIDO), United Nations Institute for Training and Research (UNITAR)
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH