The global imperative to tackle climate change has never been more crucial. This report, prepared for the 29th Conference of the Parties (COP29), aims to synthesise critical data points, strategic insights and progress on the greening of the financial system and the alignment of the financial sector with global climate goals. The NGFS was founded to help strengthen the global response to meet the objectives of the Paris Agreement by mobilising central banks, financial supervisors and international financial institutions towards the same goal of greening the financial system. Over the last seven years, the NGFS has highlighted that greening the financial system is not just driven by the need to manage climate-related risks to the financial system but also a strategic opportunity to ensure long-term economic resilience and stability.
This report is a collective effort, building on knowledge and data from NGFS members, observers, and knowledge partners. A number of initiatives have aimed to assess the state of climate finance. However, the uncoordinated nature of these assessments makes it difficult to provide a holistic and up to date view on the state of green finance. With this report, the NGFS aims to leverage its convening power to compile and synthesise the latest data and insights from the publications of the NGFS, the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD), the World Bank, as well as available evidence from the Climate Policy Initiative (CPI) and the World Wildlife Fund (WWF) as knowledge partners.
To move towards a greener financial system – i.e., one that recognises that the economy is rooted in nature and effectively manages climate and environmental risks –, financial decision-making processes must integrate climate, nature or transition considerations. A global collective effort is required, bringing together advanced economies (AEs) and emerging markets and developing economies (EMDEs) towards a common goal. This report aims to provide insights that cater to the specific needs and capacities of different countries, recognising their within group differences and challenges and that a one-size-fits-all approach is insufficient.
While discussions on climate finance have often focused on “bridging the gap”, this report underlines that efforts must go beyond the mobilisation of additional public and private funds. To accompany this broader alignment of financial flows to take place at the required speed, regulatory and supervisory frameworks must fully consider the implications of climate change and the net-zero transition. More generally, climate and nature should be considered by an integrated approach as there are unavoidable feedback loops between them.