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WWF assessment of sustainable financial regulations and central bank activities 2022 - Highlights

Deloitte is proud to have supported the World Wide Fund For Nature (WWF) with producing its annual Sustainable Financial Regulations and Central Bank Activities (SUSREG) report 2022. The report was launched at the UN Biodiversity Conference (COP15) in December 2022 and assesses the progress of sustainable financial regulation and supervisory activities within 44 jurisdictions (see below).

Source: WWF SUSREG annual report 2022

The report outlines how financial regulators, supervisors and central banks integrate climate and broader environmental and social considerations into their activities. It also includes examples of good practices, a list of main gaps in sustainable financial regulation, and specific recommendations for central banks and supervisors to achieve a net zero and a nature positive economy. Notably, the SUSREG framework was expanded this year to cover the insurance industry, in addition to central banks and the banking industry (which were already covered in last year’s report). The high-level framework can be seen below:

Source: WWF SUSREG annual report 2022

There are a number of interesting conclusions that we can draw from this year’s assessment. Some of the highlights are:

Still a long way to go: Overall, the assessment finds that despite progress by several front-running jurisdictions, there are still a number of gaps hindering progress in relation to the transition to a nature‑positive financial services sector. While relevant policies, regulations, and supervisory guidance for the financial services sector are currently being developed, the pace and scope of the work does not match the severity of the ongoing climate and biodiversity crises.

Lack of more concrete measures: Regulatory expectations around strategy, governance, and disclosures are gradually being introduced, but concrete incentives and prudential measures are still rare. Broader environmental and social expectations often lag narrower climate change-related issues. For the insurance sector specifically, there is more work to be done to ensure that both the investment and underwriting activities of insurers are subject to appropriate and consistent expectations.

Global alignment: While the integration of risk and impact considerations into policies and processes has started in some leading jurisdictions (many of them in the European Union), much remains to be done to create a global level-playing field and systematically incorporate the emerging good practices identified in this report.

Differing levels of maturity: Interestingly, some central banks and supervisors in developing countries (such as Brazil and Malaysia) have demonstrated meaningful progress and, in some cases, even stronger commitments to environmental and social considerations relative to some more developed countries. This shows that economic and technological advancement is not necessarily a pre-requisite to making progress towards sustainable development.

Words vs. actions: Moreover, while some jurisdictions are quite vocal around their green policy agendas, these countries do not necessarily have the most mature regulatory practices when it comes to sustainable finance.

To read more about these issues, please click here to read or download a full copy of the SUSREG report. In particular, a selection of main gaps, expectations and best practices identified can be found in the executive summary. The full country-by-country, indicator-by-indicator results will also shortly become available in an online tracker published by WWF.

WWF commissioned Deloitte Switzerland to provide support in developing the framework, performing the country assessments and contributing to the production of the annual report. In our view, the assessment and promotion of the best sustainable finance practices, supported by direct engagement with national authorities, is a constructive approach that will deliver positive results for policymakers, the financial sector, society and nature. We look forward to continuing the collaboration and supporting the 2023 assessments.