In January 2019, the Bank of England, with the assistance of the Financial Conduct Authority and Prudential Regulation Authority, set up a joint climate risk forum to coordinate climate change action and share best practices. They each laid out new expectations of how the firms they supervise will be managing climate risk, serving as an example of how to incorporate sustainability as a core banking activity, rather than a corporate social responsibility. UN Environment took part in the forum and offered legal best practices on climate change mitigation.
Policymakers in charge of environmental policy and climate action are insufficiently aware of the various fiscal tools available to catalyse climate finance such as green bonds and transfer pricing. The latter is a mechanism for pricing transactions within and between enterprises under common ownership or control and which greatly boost implementation of climate laws when Article 6 of the Paris Agreement becomes operational. Article 6 is a key part of the Paris Agreement which allows Parties to voluntarily cooperate to meet their nationally determined contributions, providing for international transfers of mitigation outcomes, a new mechanism for mitigation and sustainable development, and non-market approaches. Article 6 establishes the foundation for a post-2020 carbon market, but there are still many complex issues to be discussed and decided among Parties to finalize the Paris Agreement work programme.
UN Environment is ready to work with agencies such as central banks, regulators and the World Bank to bring predictability to legal regimes and facilitate uptake of climate finance.
You can also read: Climate Finance Law: Legal Readiness for Climate Finance