Greening Financial Systems, from a UN Environment Perspective
Erb alumnus Marcos Mancini is a country manager in Buenos Aires, Argentina, with the UN Environment Programme (UNEP) Inquiry into the Design of a Sustainable Financial System. He talked with Erb about the inquiry’s work and the sustainable finance issues involved.
Could you tell us a little about what the UNEP Inquiry team does?
The Inquiry Into the Design of a Sustainable Financial System was set up in 2014 with the objective of advancing options to improve the financial system’s effectiveness in allocating capital to sustainable investments. It is not the only UN environment team working in the sustainable finance field—the UN Environment Program Finance Initiative works as an association of finance institutions on how to factor sustainability considerations into their lending, investment and insurance decisions. The inquiry, however, was launched to look at the broader architecture of financial markets. What are the rules of the game, and how do they need to change for the financial system to deliver on its true purpose—to finance a sustainable transformation in the real economy? If we are committed to the environment and the 2030 agenda, what are the roles of central banks, financial regulators, stock exchanges and credit rating agencies when looking at the broad architecture of the financial market?
What are the inquiry's main areas of focus?
The inquiry has worked on three verticals: One is country engagement. We have worked in more than 20 countries with different financial market regulators, looking to see what actions they can take to green the financial system within each market—and also broader, more encompassing market regulators or actors such as the World Bank. Another vertical includes specific topic dives, such as how digital finance can be a vehicle to enhance the mobilization of sustainable capital more effectively. The third vertical is policy, more particularly in fora like the G20 or G7. Broadly, the inquiry has produced over 120 briefings and reports on sustainable finance (see http://unepinquiry.org).
Under the G20, we are the secretariat for the Sustainable Finance Study Group (SFSG). Officially launched during China’s G20 presidency as the Green Finance Study Group, it changed its name under Argentina’s G20 presidency, recognizing the pressing need to address social issues alongside environmental ones. Co-chaired by the People’s Bank of China and the Bank of England, the SFSG is the first group within the G20’s finance track that looks to identify institutional and market barriers to sustainable finance, and based on country experiences, develop options on how to enhance the ability of the financial system to mobilize private capital for sustainable investment.
What does your day-to-day work entail?
It varies with the G20 cycle. Because we act as secretariat for the SFSG, a lot of the role has been in helping Argentina develop the agenda and then socialize that agenda with the G20 countries—and then understand the different countries’ positions and perspectives. This includes where the different pain points are and the different risks on the agenda that Argentina is looking do to consensus on.
Within our G20 engagement portfolio, we are also knowledge partners for the Climate Sustainability Working Group, where UN Environment is developing an input paper on the alignment of climate finance to the G20 members’ nationally determined contributions (NDCs). This is what actions development financial institutions can take to align their financing more with the NDCs from the Paris Agreement.
Locally, in Argentina’s financial markets, we are helping the capital markets regulator develop the bond market: We’re working to deliver a set of guidelines for green, social and sustainable bonds.
Could you tell us about your work with Mexico as well?
Prior to joining UN Environment, I was head of sustainability and responsible investment at Grupo Financiero Banorte (GFNorte), the second-largest financial group in Mexico. GFNorte is a well-diversified financial group, and I was lucky enough to be able to understand and drive sustainability initiatives across the financial sector. Actively engaging with Mexico’s Banking Association, I promoted and influenced the 20 largest banks in Mexico to sign and adopt the association’s sustainability protocol.
I understood that to advance the sustainability agenda within the bank and keep GFNorte at the forefront of sustainable finance, I needed to drive a more systemic effort in the Mexican financial system. I was therefore involved in advancing a sustainable finance agenda through the Mexican Stock Exchange and with market regulators.
This breadth of engagements, once I transitioned into the inquiry, allowed me to continue engaging with Mexican financial regulators. I am currently working with the Mexican Central Bank to implement last year’s recommendations of the SFSG, which were on environmental risk analysis and the use of publicly available environmental data.
How has your Erb Institute education come into play in this position?
In several ways. My background is in biology, and after college in Argentina, I started working in environmental consulting, on environmental impact assessment studies in big infrastructure projects in the energy industry. There, I understood the importance of having a business acumen. But as a biologist, I didn’t have that, nor the financial knowledge, so I started looking at master’s programs that would help me build my financial skills and business acumen. I ended up at the Erb Institute because of the network that it has. It has helped me bridge these two worlds—the financial world and the sustainability world—that weren’t talking to each other that much until a couple of years ago.
What is one of the biggest lessons you have learned with UN Environment?
Understanding the different world views around sustainable finance and how people think about change, taking into consideration their own country experiences. Also, understanding the political nuances and leadership imprints that drive the countries’ foreign relations and how to adapt to those realities to try to promote the sustainability agenda in a politically sensitive context.
How has the experience changed your perspective?
From micro to macro. In Mexico, I was looking at the relations from a network of actors in a small system where most people new each other. It is very interesting to try to understand how to nudge the system from an international perspective. This is where I think the inquiry has made a difference—we have managed to nudge the system.
What is one of the challenges you face?
It always comes down to people and finding the right sustainability champion. There are, of course, more technical aspects, such as maturity mismatches, but if you have people with the will to act and address the sustainability agenda, those can be tackled.
This is what’s exciting about the increasing Erb network. We are either having alumni become these change agents or we are closing down the degrees of separation to the people that we need to influence to make change happen.