The finance sector underpins all commercial activity, and so it is critical to the transformation to a sustainable world. The way capital is allocated to businesses and individuals – right down to the types of savings, insurance and investment products available – has a major influence on sustainable development. Our objective in working with this sector is to shift financial resources towards sustainable activities and away from unsustainable ones. The financial crisis has made this all the more urgent.

There are many interlinked barriers to greater sustainability in the finance sector. It tends to take a very short-term view of company performance, which can prevent companies from taking action to deliver sustainability over the longer term.  This is partly because of the incentive structures, and also because the sector has inadequate tools to assess risk and value the assets that matter. 

Our work

Forum’s work makes investment in sustainable activities more attractive to investors. We highlight and explore new risk assessment and valuation techniques, new financial mechanisms, and new business models. For example, we are looking at how to encourage more investment in:

• rainforests;
• adaptation to climate change in developing countries;
• microfinance, giving poor communities access to financial services;
• climate change mitigation; and
• carbon markets in developing countries.

We also work with insurance companies to help them to incorporate social and environmental risks, such as climate change, more effectively in their business models. For example, we delivered the one-year review for the ClimateWise group of insurance companies which assessed progress on their commitment to embed climate change in all their acitivities.

We help our finance sector partners to:

• develop and refine their sustainability strategy, including direct and indirect impacts;
• review how their investments are affected by climate change, resource constraints and poverty; and
• train staff on how sustainability issues relate to their work.

Our recent projects include:

• a briefing paper for the 2008 climate negotiations in Poznan on the need for public and private sectors to work together on adaptation to climate change; and
• a tool-kit for fund managers in developing countries to encourage them to embed sustainability into their decision-making on investments.

News

The Forestry Investment Review is a project on private sector investment in tropical rainforests which will be used to inform UK government policy in this area.

Climate Finance is exploring how local governments can use innovative financial mechanisms to enable low-carbon behaviours and technologies.

Our partners in the financial services sector:  

Axa
Aviva Investors
Bank of America: Merrill Lynch
Friends Provident
Prudential

Contacts

Alice Chapple: a.chapple@forumforthefuture.org
Will Dawson: w.dawson@forumforthefuture.org
Ruth Curran: r.curran@forumforthefuture.org