Global Investors for Sustainable Development Alliance

GISD analyzes alternatives to increasing the interoperability of sustainable finance approaches

Oct 05, 2021

The GISD Alliance commissioned a research paper on how to increase the interoperability of sustainable finance taxonomies, principles, and tools designed to align investments with climate and other sustainability goals.

Jurisdictions worldwide are increasingly recognizing the importance of guidance and regulation in bringing rigor to sustainable finance. However, approaches differ considerably at the national and regional levels with some relying extensively on high level principles and other being more prescriptive through taxonomies anchored in idiosyncratic activity classifications. At the same time, the private sector and non-profits are offering proprietary solutions.

The resulting lack of harmony increases complexity and can inhibit the alignment of capital flows from GISD members with sustainability goals.

Prof. Andreas Hoepner (University College Dublin), Ifigenia Paliabelos (SDG Labs) and Dr. Joeri Rogelj (Imperial College London) led a research effort to define an alternative approach to increasing the compatibility of sustainable finance approaches. Instead of recommending either a high level principle- or an activity based taxonomy approach, they commence their thinking from key performance indicators shared globally and define seven technical principles that all approaches can integrate. This way, a minimum level of commonality is achieved that investors can expect across jurisdictions. They then apply these principles to SDG 13: Climate Action and SDG 5: Gender Equality.

The full report can be found here.