The concept of sustainable finance has arisen from the United Nations Climate Change conferences.
The 2015 Paris Climate Accords (known as the Paris Agreement) is an international treaty agreed at the 2015 United Nations Climate Change Conference (COP21). It covers climate change mitigation, adaptation, and finance. The agreement states that its 195 signatories must make "finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development."
The concept of sustainable finance has developed as a key vehicle for meeting these goals.
The European Commission define sustainable finance as: “The process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects”
The International Standards Organisation is currently developing standards relating to sustainable finance. These are due to be issued towards the end of 2022. The International Financial Reporting Standards Foundation is also developing financial reporting standards relating to sustainability and climate impact disclosure. These will apply to all organisations which apply IFRS to its statements.
If you want to know more about sustainable finance and financial reporting look out for my Sustainable Finance course coming in the autumn of 2022.