Sustainable Banking and Finance Network MEASUREMENT FRAMEWORK AND METHODOLOGY October 2021 About SBFN An evolving framework Established in 2012, the Sustainable Banking and Finance The SBFN Measurement Framework reflects the activities, Network (SBFN) is a unique, voluntary community strategies, and tools that members use to promote of financial sector regulatory agencies and industry sustainable finance in their countries. It evolves to match associations from emerging markets committed to advances in country initiatives. It also incorporates the latest advancing sustainable finance in line with international international standards and best practices identified by best practice. SBFN is facilitated by IFC as secretariat, and members as important to their efforts. supported by the World Bank Group. A member-led approach As of October 2021, SBFN comprised 43 member countries The Framework was designed with extensive member input representing over US$43 trillion and 86 percent of total under the leadership of the Measurement Working Group banking assets in emerging markets. Members are and Co-Chairs. Updates to the Framework are guided by committed to collectively driving measurable change. the Measurement Working Group and agreed by all SBFN Members. Why a measurement framework? In 2016, members requested a systematic comparison of Data collection in partnership with members country approaches to developing national sustainable As of 2021, data collection for the SBFN Global Progress finance frameworks. The SBFN Measurement Working Report relies on member country reporting in line with the Group was established to convene member inputs on the updated Measurement Framework. Information is supported design of a common framework to benchmark country by evidence, which is verified by the SBFN secretariat in progress and accelerate peer-to-peer knowledge exchange. collaboration with third-party service providers. Evaluation The Framework is designed to inform the biennial SBFN and milestones are objective and transparent. Members Global Progress Report. approve the final Global and Country Progress Reports. The Framework can be used as: The Measurement Framework is based on three intersecting themes in sustainable finance. For each a mapping tool to capture the dynamic theme, it assesses regulatory guidance, supervision interaction of collective insights, market- strategies, disclosure requirements, and voluntary based actions, and policy leadership industry approaches. demonstrated by SBFN members as they move their financial markets ESG Integration refers to the management of toward sustainability; environmental, social, and governance (ESG) risks in the governance, operations, lending, and investment a benchmarking tool for SBFN activities of financial institutions. members to learn from and compare peer approaches, track and review Climate Risk Management refers to new governance, progress against global benchmarks, risk management, and disclosure practices that financial develop common concepts and institutions can use to mitigate and adapt to climate change. definitions, and leverage innovations and strengths; and Financing Sustainability refers to initiatives by regulators and financial institutions to unlock capital flows a forward planning and capacity for activities that support climate, green economy, and building tool to identify future policy social goals. This includes new products like green bonds pathways and capacity building needs. and sustainability-linked loans. Initiatives include definitions, guidance, taxonomies, monitoring, and incentives. 1 The Measurement Framework consists of three complementary components: 1. Progression matrices The stage mapping is based on qualitative milestones and Drawing on SBFN members’ common development paths quantitative analysis related to (i) progress in developing and milestones, the SBFN Progression Matrix provides and implementing national policies and principles, and (ii) an overview of market-wide progress for all SBFN countries industry uptake and practices. In the 2021 report, in addition across three typical stages of development. It allows each to the Overall Progression Matrix, three pillar-level matrices SBFN member to review its own progress and identify the are added to reflect a country’s development process in strengths and weaknesses of its approach. each of the pillar areas. Overall Mapping Country Maturing Implementation Preparation Consolidating Mainstreaming Behavioral Changes Developing Advancing Commitment Formulating Pillar-Level Mapping Pillar 2: Pillar 3: Pillar 1: Climate Risk Financing ESG Management Sustainability Integration 2. Pillar benchmarking A dynamic assessment is conducted Pillar 1: Pillar 2: Pillar 3: Climate Risk Financing across several priority pillars of sustainable ESG Integration Management Sustainability finance, using qualitative and quantitative • National framework datapoints to assess progress and allow Sub-pillar 1: • Alignment with international goals and standards comparison across countries. Three pillars, Strategic Alignment • Alignment with national goals and strategies three cross-cutting sub-pillars, 11 cross- Sub-pillar 2: Regulatory • Overall approach and strategy cutting indicators, and 75 underlying • Technical guidance and Industry Association • Supervisory activities and incentives datapoints are used to objectively assess a Actions • Tracking and aggregated disclosure country’s sustainable finance framework(s), Sub-pillar 3: • Strategy and governance according to clarity, depth, and alignment • Organizational structure and capacity Expectations of Financial • Policies and procedures to international good practice. Institution (FI) Actions • Tracking, reporting, and disclosure 3. Sector data and case studies In 2021, data collection included an exploratory request for quantitative data points — where available — for the number and percentage of financial institutions that are implementing ESG integration as well as climate risk management and disclosure; and the total value of green, social, and sustainability bond issuance. Detailed case studies were also collected of innovative approaches by regulators and industry. Case studies will be published in a new on-line case study catalogue. SBFN on-line case study catalogue Coming soon 2 SBFN Measurement Framework pillars, sub-pillars, indicators, and underlying datapoints Pillar 1: ESG Integration Sub- Indicator No. Underlying datapoint pillar National framework1 1 Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for (e.g. policies, roadmaps, integrating the consideration of environmental, social, and governance (ESG) risks and performance? guidance, regulations, 2 Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance or other non-lending FIs voluntary principles, that sets out expectations for integrating the consideration of ESG risks and performance? Strategic Alignment templates, or tools) Alignment with 3 Does the Framework make reference to international sustainable development frameworks or goals? international goals and standards 4 Does the Framework make reference to established international ESG risk management standards and principles for FIs? Alignment with national 5 Does the Framework make reference to specific national development objectives, plans, policies, goals, or targets? goals and strategies 6 Does any cooperation exist between agencies or between the regulator and industry association with respect to policy design and/or implementation related to ESG integration? 7 Does any inter-agency data sharing currently exist related to ESG integration by FIs? Overall approach and 8 Does the Framework provide guidance on the role of the regulator or industry association with regard to assessing and managing ESG risk Regulatory and Industry Association Actions strategy and performance in the financial sector? 9 Has the regulator or industry association undertaken market assessment to identify systemic ESG risks through analysis of the portfolios of supervised entities/members and published the results? Technical guidance 10 Does the Framework provide technical guidance or tools to support implementation of ESG risk and performance management by the financial sector? Supervision activities 11 Is the implementation of the Framework regularly monitored and/or information regularly collected from FIs by the regulator and/or industry and incentives association? 12 Does the regulator or industry association provide any financial or non-financial incentives for FIs to manage ESG performance as part of the Framework? 13 Does the regulator or industry association apply any disincentives/penalties for non-compliance by FIs in terms of expectations from the regulator and/or industry association related to ESG risk management as part of the Framework? Tracking and 14 Has the regulator or industry association established a data collection approach and database to track or regularly publish data related to aggregated disclosure ESG integration by FIs as part of the Framework? Strategy and 15 Does the Framework require/ask the FI’s board of directors (or highest governing body) to approve an ESRM and/or ESG integration strategy, governance and to supervise its implementation? Organizational structure 16 Does the Framework require/ask FIs to allocate resources/budget commensurate with portfolio ESG risks and define roles and and capacity responsibilities for ESG integration within the organization? 17 Does the Framework require/ask FIs to develop and maintain the ESG expertise and capacity of staff commensurate with portfolio ESG risks Expectations of FI Actions through regular training and learning? 18 Does the Framework require/ask FIs to create incentives for managers to reduce the ESG risk-level of the portfolio over a specified timeframe? Policies and procedures 19 Does the Framework require/ask FIs to develop policies and procedures to identify, classify, measure, monitor, and manage ESG risks and performance throughout the financing cycle at the client level and/or the transaction/project level? 20 Does the Framework require/ask FIs to undertake a regular review and monitoring of ESG risk exposure at aggregate portfolio level? 21 Does the Framework require/ask FIs to establish and maintain an external inquiry/complaints/grievance mechanism for interested and affected stakeholders in relation to ESG practices? Tracking, reporting, and 22 Does the Framework require/ask FIs to report ESG risks and performance to the regulator or industry association? disclosure 23 Does the Framework require/ask FIs to report on ESG integration publicly? 24 Does the Framework require/ask FIs to track credit risk (e.g. loan defaults) and/or financial returns in relation to ESG risk level? Pillar 2: Climate Risk Management National framework 25 Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for integrating the consideration and management of climate risks and their impact in the national economy? 26 Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance, or other non-lending FIs that sets out expectations for integrating the consideration and management of climate risks and their impact in the national economy? Strategic Alignment Alignment with 27 Does the Framework make reference to international agreements or frameworks to address climate? international goals and 28 Does the Framework recognize or align with established regional or international good practice for climate risk management and disclosure standards by FIs? Alignment with national 29 Has the regulator or industry association aligned the Framework with national goals to address climate change in line with the country’s goals and strategies Nationally Determined Contributions (NDCs) to the Paris Agreement? 30 Does any cooperation exist between agencies, or between government and industry association, with respect to policy design or implementation related to climate risk management? 31 Does any inter-agency data sharing currently exist related to climate risk management by FIs? 1 National framework refers to the collective set of policies, roadmaps, guidance, regulations, and/or voluntary principles issued by national regulators or industry associations in relation to each pillar of sustainable finance. SBFN recognizes that national frameworks for sustainable finance vary from country to country and are influenced by national priorities and characteristics. They are also often interdependent with other national roadmaps, policies, and regulations. Countries vary in their starting points and the types of documents to kickstart the enabling framework. For instance, initial frameworks could choose to focus on ESG risk management and/or sustainable finance opportunities such as green bonds. They could also focus on banking, capital markets, or institutional investors. The variety of SBFN frameworks provides a rich source of inspiration for peer learning and collaboration. 3 Overall approach and 32 Has the regulator or industry association undertaken research on historical impacts to the economy and financial sector from climate strategy change, and/or future expected impacts resulting from physical and transition climate risks? Regulatory and Industry Association Actions 33 Does the Framework identify key sources of GHG emissions – such as in particular sectors – as priorities in the proactive management of climate risks by the financial sector? 34 Does the Framework incorporate the conservation/restoration of natural carbon sinks (such as oceans, forests, mangroves, grasslands, and soils) as an important part of reducing climate change risks (e.g., through guidelines, scenario analysis, targets, or incentives for FIs)? 35 Has the regulator or industry association developed an internal strategy to address climate risk, and/or embedded climate risk management into its governance, organizational structures, and budget as part of the Framework? 36 Has the regulator or industry association undertaken any activities to expand and deepen analytical understanding of national and/or cross- border physical and transition climate risks, and to raise awareness as to how these risks may transmit to, and impact, the financial sector? Technical guidance 37 Has the regulator or industry association developed risk assessment approaches, methodologies, or tools to understand and assess the financial sector’s exposure to climate risk as part of the Framework? Regulatory and Industry Supervisory activities 38 As part of the Framework, has the regulator clarified supervisory expectations with regard to climate risk management by FIs, including Association Actions and incentives consideration of international good practices? 39 Has the regulator started to explicitly embed climate-related risk in supervisory activities and review processes as part of the Framework? 40 Is the implementation of the Framework regularly monitored and/or information regularly collected from FIs by the regulator and/or industry association? 41 Are there any financial or non-financial incentives to encourage FIs to establish climate risk management systems? Tracking and aggregated 42 Does the regulator or industry association regularly collect and/or report market-level and/or FI-level data on climate-related financial sector disclosure risks as part of the Framework? Strategy and governance 43 Does the Framework require/ask FIs to establish a strategy for climate risk management with responsibility at the board of director level (or highest governing body)? Organizational structure 44 Does the Framework require/ask FIs to define the roles and responsibilities and related capacities of the FI’s senior management and and capacity operational staff in identifying, assessing, and managing climate-related financial risks and opportunities? Expectations of FI Actions Policies and procedures 45 Does the Framework require/ask FIs to expand existing risk management processes to identify, measure, monitor, and manage/mitigate financial risks from climate change? Tracking, reporting, and 46 Does the Framework require/ask FIs to report on their overall approaches to climate risk management in line with international good disclosure practices (e.g. TCFD), or establish a timeline by which FIs should begin to align their reporting with such practices? 47 Does the Framework require/ask FIs to identify, measure, and report on exposure to sectors which are vulnerable to transition risk and physical risk? 48 Does the Framework require/ask FIs to adopt and report on performance targets to reduce portfolio greenhouse gas (GHG) emissions on a regular basis? 49 Does the Framework require/ask FIs to adopt and report on performance targets to reduce exposure to climate change risks at the portfolio level on a regular basis? Pillar 3: Financing Sustainability National framework 50 Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for integrating the consideration of instruments, goals, and standards for financing sustainability, including requirements for ensuring credibility and managing and measuring resulting impacts in the national economy? 51 Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance, or other non-lending FIs that sets out expectations for integrating the consideration of instruments, goals, and standards for financing sustainability, including requirements for ensuring credibility and managing and measuring resulting impacts in the national economy? Strategic Alignment Alignment with 52 Has the regulator or industry association developed a strategy, regulations, or set of frameworks for stimulating the allocation of capital to international goals and sustainable assets, projects, and related sectors in line with global goals, such as the Sustainable Development Goals (SDGs)? standards 53 Does the Framework recognize and/or align with existing standards, voluntary principles, or market good practices related to sustainable finance instruments? Alignment with national 54 Does the Framework enable the achievement of stated national objectives by guiding capital to sectors, assets, and projects that have goals and strategies environmental and social benefits in line with national sustainable development priorities, strategies, targets, and the size of sustainable investment needs, and taking into account the local barriers to scaling-up sustainable finance? 55 Does any cooperation exist between agencies or between the regulator and industry association with respect to policy design or implementation related to sustainable finance flows? 56 Does any inter-agency data sharing currently exist related to stimulating and monitoring sustainable finance flows? Overall approach and 57 Does the Framework require/ask the regulator or industry association to establish mechanisms to identify and encourage the allocation of Regulatory and Industry Association strategy capital to sustainable sectors, assets, and projects? Technical guidance 58 Does the Framework provide definitions, examples, and/or a taxonomy (catalogue and guidelines) of sustainable finance assets? 59 Does the Framework provide guidelines for extending green, social, or sustainability-focused loans (excluding bonds)? 60 Does the Framework provide guidelines for issuance of green, social, or sustainability bonds? Actions 61 Does the Framework require/ask for external party verification to ensure the credibility of sustainability instruments? Supervisory activities 62 Does the regulator or industry association monitor information reported by FIs related to green/social/sustainability investment, lending, and and incentives other instruments to prevent greenwashing and social-washing? 63 Are there any financial or non-financial incentives for FIs to develop and grow green, social, or sustainability finance instruments? Tracking and aggregated 64 Does the regulator or industry association collect and/or publish data from FIs or other sources about allocation of capital to green/social/ disclosure sustainability assets, projects, or sectors? 4 Strategy and governance 65 Does the Framework require/ask FIs to establish a strategy, governance, or high-level targets, including at the Board of Directors level, for capital allocation to sustainable assets, projects, or sectors? Organizational structure 66 Does the Framework require/ask FIs to define internal staff roles and responsibilities to encourage finance flows to green, social, and/or and capacity building sustainability-focused investments? 67 Does the Framework require/ask FIs to develop and maintain internal staff capacity on green, social, or sustainability products through regular training and learning? Policies and procedures 68 Does the Framework require/ask FIs to put in place policies and procedures for defining, issuing, managing proceeds, tracking performance, Expectations of FI Actions and reporting on green, social or sustainability-focused products? 69 Does the Framework require/ask FIs to appoint an independent external reviewer to confirm that the FI’s internal framework meets the requirements of the recognized national framework and regulations, or aligns to international standards? 70 Does the Framework require/ask that FIs create incentives for managers to increase sustainable loans or investments in the portfolio? Tracking, reporting, and 71 Does the Framework require/ask FIs to publish annual updates on the performance and impacts of the sustainability instruments in disclosure compliance with relevant national and/or international standards? 72 Does the Framework require/ask FIs to obtain and disclose independent review of metrics reported annually in relation to the social and environmental outcomes and impacts achieved through the sustainability instruments? 73 Does the Framework require/ask FIs to report to the regulator(s) or industry association(s) on allocation and/or outcomes of green, social, and/or sustainability loans? 74 Does the Framework require/ask FIs to report to the regulator(s) or industry association(s) on green, social, and/or sustainability bonds or other positive impact investments? 75 Does the Framework require/ask FIs to report publicly on their green, social, and sustainability-focused finance activities and positive outcomes or impacts (i.e. not only to the regulator or shareholders)? 5 Figure 1: Overall Progression Matrix Milestones Maturing Implementation Preparation Consolidating Mainstreaming Behavioral Changes Developing Advancing Commitment Formulating A comprehensive set There is an established A first national Implementation tools of national Sustainable ecosystem of The financial sector A formal initiative Finance initiatives and Sustainable Finance roadmap, framework, and initiatives are regulator or industry — led by a financial frameworks are in initiatives and policy, regulation, in place, such as association has sector regulator or place, covering all parts frameworks that align or set of voluntary guidance, guidelines, announced a formal industry association or of the financial system. and integrate with each industry principles on reporting templates, commitment to both — is in progress other. Sustainable Finance training, online tools, The national achieve progress on to develop a national has been formally and supervisory frameworks are aligned Financial institutions are Sustainable Finance roadmap, framework, launched. instructions. with international good required or encouraged in the next two years. policy, or voluntary industry principles on A formal taskforce The national practice across all three to report publicly on Initial steps have Sustainable Finance. pillars of Sustainable their implementation or dedicated unit is Sustainable Finance been taken, such as Finance. of Sustainable Finance leading implementation framework covers a kick-off meeting or Preparations include across risk and efforts — either within multiple parts of the Consistent and workshop with key research, suveys, opportunity. the regulator or financial system. comparable data is stakeholders and multi-stakeholder industry association, or being collected by the The regulator or industry. engagement, and/or Financial institutions as a multi-stakeholder regulator as part of industry association awareness raising for report on their working group or supervision — or by the has multi-year data the financial sector. implementation of the platform. industry association, on implementation by roadmap, framework, The Sustainable policy, or voluntary about implementation financial institutions Finance initiative is principles in line with by financial institutions. — including both risk acknowledged or consistent reporting and opportunity. Data supported by both instructions or includes information regulators and industry. templates provided on the benefits of by the financial sector Sustainable Finance. Awareness raising and regulator or industry capacity building have association. been conducted. Progression Matrix Milestones – Pillar 1: ESG Integration Figure 2: Maturing Implementation Preparation Consolidating Mainstreaming Behavioral Changes Developing Advancing Commitment Formulating A comprehensive The national A first national Implementation tools national initiative or set frameworks for ESG The financial A formal initiative is in of frameworks are in Integration are aligned policy, regulation, and initiatives are sector regulator or progress to develop place that promote ESG with international good guidelines, or set of in place, such as industry association a policy, regulation, Integration across all parts practice and national voluntary principles guidance, guidelines, has announced guidelines, or voluntary of the financial system. regulations; and has been formally reporting templates, a commitment to principles on ESG are consistent across launched that sets training, online tools, develop a policy, Integration for the The national frameworks different parts of the out requirements and supervisory regulation, guidelines, financial sector. cover all three cross- financial sector.  or recommendations instructions. or voluntary cutting areas of ESG Preparations for financial principles for the The ESG Integration Integration: Local financial include research, institutions on ESG financial sector expectations cover 1. strategic alignment, institutions surveys, multi- Integration. on integrating the multiple parts of the 2. regulatory and demonstrate that management of stakeholder industry association they have embedded A formal taskforce, financial system. environmental, social, engagement, and/ actions, and the requirements for working group, or and governance or awareness raising Financial institutions 3. expectations of ESG Integration and institution is tasked (ESG) risks and for the financial sector. report on their financial institution are reporting on their with implementation performance (ESG and/or supervision implementation of actions. efforts. Integration). and is supported ESG Integration in line with consistent Consistent and Extensive data by regulators and A first event or reporting instructions comparable data are are becoming available industry.  workshop has been or templates provided becoming available on on trends among held to engage Activities include by the financial sector trends in the practices financial institutions relevant financial awareness raising regulator or industry of financial institutions in regarding practices in sector stakeholders and capacity association. relation to ESG Integration ESG Integration and on the topic of ESG building for financial and the resulting benefits. the resulting benefits. Integration for the institutions on the financial sector. new expectations for ESG Integration. 6 Figure 3: Progression Matrix Milestones – Pillar 2: Climate Risk Management Maturing Implementation Preparation Consolidating Mainstreaming Behavioral Changes Developing Advancing Commitment Formulating A comprehensive The national frameworks A national policy, Implementation tools for Climate Risk national initiative or The financial A formal initiative Management are aligned set of frameworks regulation, guidelines, or and initiatives are in sector regulator or is in progress to with international good are in place aimed at set of voluntary industry place, such as guidance, industry association develop or refine practice expectations and supporting all parts of principles is in place that guidelines, reporting has announced a national policy, national climate change the financial system to includes requirements templates, training, a commitment to regulation, guidelines, commitments; and are manage climate risk. and/or recommendations online tools, and develop a policy, or voluntary industry consistent across different for the financial sector supervisory instructions The national frameworks parts of the financial regulation, or principles on Climate to manage climate to help the financial cover all three cross- voluntary principles Risk Management sector. risk — either as part of sector manage climate- cutting areas of Climate on Climate Risk for the financial ESG Integration or as a related physical and Risk Management: Local financial institutions Management for the sector — either as standalone framework. transition risks. 1. strategic alignment, demonstrate that they financial sector. part of an existing ESG framework or A formal taskforce, Financial Institutions 2. regulatory and have embedded the Initial awareness as a standalone industry association requirements for climate working group, or report on their raising and framework. actions, and risk management and are institution is taking the approach to Climate knowledge sharing 3. expectations of reporting on their efforts. lead with implementation Risk Management in is being organized Preparations include financial institution and/or supervision, and is line with consistent Extensive data are by the regulator or research, surveys, actions. supported by regulators reporting instructions becoming available on industry association. multi-stakeholder and industry. or templates provided Consistent and trends among financial engagement and/or by the financial sector comparable data are institutions regarding awareness raising for Activities include regulator and/or becoming available on climate risk management the financial sector. awareness raising, industry association and trends in the practices and the resulting benefits. research, guidance and/ reflecting international or capacity building for of financial institutions practices. in relation to Climate financial institutions on managing climate-related Risk Management and physical and transition the resulting benefits. risks in line with the new expectations in the national framework. Figure 4: Progression Matrix Milestones – Pillar 3: Financing Sustainability Maturing Implementation Preparation Consolidating Mainstreaming Behavioral Changes Developing Advancing Commitment Formulating A comprehensive The national frameworks national initiative or for Financing A national framework Implementation tools The financial sector A formal initiative set of frameworks Sustainability are aligned is in place that and initiatives are regulator or industry is in progress are in place aimed at with international good includes regulations in place, such as association has made to develop a supporting all parts of practice expectations or guidance for the guidance,guidelines, a public commitment policy, regulation, the financial system and national sustainable financial sector to taxonomies, to develop a policy, guidelines, or to promote financial development plans; and promote financial reporting templates, regulation, guidelines, voluntary principles flows to green, social, or are consistent across flows to green, social, training, online tools, or voluntary principles to promote financial sustainability-focused different parts of the or sustainability- and supervisory to promote financial flows to green, social, projects and sectors. financial sector. focused projects and instructions to help flows to green or or sustainability- sectors. the financial sector The national Local financial institutions sustainability-focused focused projects and promote financial flows frameworks cover all demonstrate that projects and sectors. sectors. A taskforce, working to green, social, or three cross-cutting they have embedded group, or institution sustainability-focused Initial awareness Preparations include areas of Financing the requirements for is tasked with projects and sectors. raising and knowledge research, surveys, Sustainability: Financing Sustainability implementation sharing is being multi-stakeholder 1. strategic alignment, in their operations, and/or supervision Financial institutions organized by the engagement and/or 2. regulatory and portfolio, products, and is supported report on their regulator or industry awareness raising for industry association and services and by regulators and approach to Financing association. the financial sector. actions, and are reporting their industry. Sustainability in 3. expectations of FI performance publicly. line with consistent Activities include actions. reporting instructions Extensive data are awareness raising or templates provided Consistent and becoming available on and capacity by the financial sector comparable data are trends among financial building for financial regulator or industry becoming available institutions regarding institutions on the association. on trends in the Financing Sustainability new expectations practices of financial and the resulting benefits. for Financing institutions in Financing Sustainability. Sustainability and the 7 resulting benefits. Figure 5: Emerging roadmap for sustainable finance frameworks across all three pillars In the 2021 data collection, notable progress was made in several Countries vary in their starting points countries to conduct collaborative and the types of documents to research on capacity and practices kickstart the enabling framework. A of local financial institutions. first framework could focus on ESG integration, climate risk, sustainable Often the initial awareness-raising events finance opportunities, or a combination and dialogues allow financial institutions, of these, and be issued by regulators, and various agencies to a regulator or industry Formal commitment contribute to a shared vision and roadmap. association. and kick-off event led by regulator or industry association Preparation Stage First framework document published Formal initiative to Research on Multi-stakeholder which sets out develop roadmap and international trends engagement and expectations of the framework and current practices of awareness raising financial sector on financial institutions sustainable finance Clear reporting requirements yield greater compliance and comparable Guidelines, reporting templates, data. This information helps the taxonomies, and scorecards provide regulator and/or industry association clarity on what is expected and to identify trends in risk exposure, facilitate more rapid adoption. implementation of the national framework, and allocation of capital to sustainable finance opportunities. Implementation Stage Comprehensive initiative covers all parts of the financial Financial institutions Implementation tools, Awareness raising and Formal task force – sector report in line with templates, and guidance capacity building to multi-stakeholder clear reporting introduced implement framework committee or dedicated guidance or template unit in regulator or industry association National sustainable finance frameworks and initiatives become more robust and mature when multi-year and comparative data start to emerge about implementation by financial institutions and the resulting benefits and outcomes. Over time, most countries tend to expand their national sustainable finance frameworks to embrace all parts of the financial sector in order to address both sustainability risk, and opportunity in a comprehensive way. Maturing Stage National framework Consistent and Ecosystem of Financial institutions Multi-year data on aligns with recognized comparable market sustainable finance report publicly on their sustainable finance good practices across data become available, initiatives for the sustainable finance practices by financial all three sustainable showing behavioral whole financial sector implementation across institutions show finance pillars change across both risk and risk and opportunity consistent behavior opportunity change and benefits 8 SBFN provides a unique and essential platform for financial sector regulators and industry associations to work together. As sustainable finance systems mature, collaboration between these different actors becomes critical to moving forward. This work should be extended to include capital markets, insurance, pension funds, and asset management. Nezha Hayat Chairperson and CEO Moroccan Capital Market Authority (AMMC) Co-chairs of the SBFN Measurement Working Group Nezha Hayat Nomindari Enkhtur Mariana Escobar Uribe Chairperson and CEO Chief Executive Officer Head of Sustainable Finance Moroccan Capital Market Mongolian Sustainable Financial Superintendent Authority (AMMC) Finance Association (MSFA) of Colombia (SFC) www.sbfnetwork.org 9