The launch of the International Platform on Sustainable Finance indicates an increased focus on a globalized approach to coordinating sustainable finance.

By Paul Davies and Michael D. Green

On October 18, 2019, the EU, China, India, and five other countries combined to launch the International Platform on Sustainable Finance (IPSF). Acknowledging the role that private capital has to play in scaling up sustainable investment worldwide, the IPSF seeks to provide a platform to increase private-sector funding in this area. This blog post will consider in more detail the IPSF’s aims, as well as the ways in which the IPSF intends to achieve them.

What Are the IPSF’s Objectives?

In addition to the EU, China, and India, the IPSF includes Argentina, Chile, Canada, Kenya, and Morocco — together, a group responsible for 44% of the world’s GDP and a similar percentage of the world’s carbon dioxide emissions. The IPSF’s aim is not to raise money directly, but instead to coordinate approaches and initiatives for capital markets, in order to boost private investors’ confidence in sustainable investment opportunities.

According to the IPSF’s launch statement, these initiatives may include taxonomies, standards, and disclosures, areas in which many institutions, including the European Commission, have already taken steps. (See European Commission Publishes New Guidelines on Corporate Climate-Related Reporting.) However, these steps have often lacked coordination. The founding members of the IPSF hope that establishing globally recognized international initiatives will inspire investor confidence in sustainable opportunities and encourage further investment in that space.

In particular, the IPSF will pursue three objectives:

  • Exchanging and disseminating information to promote best practices in environmentally sustainable finance
  • Comparing the different initiatives, identifying barriers, and highlighting opportunities to help scale up environmentally sustainable finance internationally
  • Enhancing international coordination, if appropriate, on environmentally sustainable finance issues

The IPSF does not intend to set up an institutionalized body to implement these aims, but instead plans to operate in what it describes as “informal and inclusive settings.” These settings may include, among others, steering committees, working groups, and a secretariat.

How Does the IPSF Intend to Achieve Its Objectives?

No details have yet been given as to the next steps for the IPSF, or which settings it intends to operate in initially. One potential approach would be to try to recruit other nations to the cause, and the IPSF’s launch statement implies that this approach is a possibility. However, the launch does, once again, highlight the increasing attention on a globalized approach to coordinating sustainable finance. Whatever the long-term impact of the IPSF, many actors within the international community clearly believe that this globalized, coordinated approach is necessary to attract an increasing amount of private-sector capital to sustainable investment.

Latham & Watkins will continue to monitor developments in this area.

This blog post was prepared with the assistance of James Bee in the London office of Latham & Watkins.