How Should Sustainable Finance Standards Be Designed for Developing Countries?

Kathrin Berensmann

Chapter 6 in Green Finance and Sustainable Development Goals, 2024, pp 145-168 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Sustainable finance took on a crucial role in supporting a sustainable recovery over the course of the COVID-19 crisis. An appropriate global framework for sustainable financial management is essential for mobilizing sufficient financial resources to achieve the Sustainable Development Goals (SDGs). Sustainable finance regulations and standards elaborated for developed countries with fairly mature financial markets and strong institutions may not be appropriate for developing countries with less-developed financial markets and weaker institutions. Experience gained from comparable regulatory processes being applied to developing countries, for example financial standards such as the Basel capital and liquidity standards, has shown that adopting a single set of financial standards to developed and developing countries will not work. For these reasons, the principle of proportionality should be applied. Simplified sustainable finance standards that take into account institutional and regulatory capacities should be elaborated and enacted in developing countries because less-complex financial regulations can be more effective and easier to implement, supervise, and monitor. Global policy-making institutions and forums should better engage developing countries as active participants in designing a global sustainable financial governance. International institutions and development cooperations should provide targeted capacity building and training.

Keywords: Green Finance; Financial Development; ESG Performance; Climate Change; Climate-Vulnerable Asian Countries; Environmental Disclosure in Financial Institutions; Environmental; Social; and Governance Issues in Corporate Valuation; Financing Renewable Energy; Gross Ecosystem Product; Green Banking Disclosures; Climate-Related Risks; Green Banking Disclosures; Development and Impact Analysis (search for similar items in EconPapers)
JEL-codes: Q01 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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