Finansinspektionen is publishing today two reports on sustainability. Together, they serve as the report to the Government that FI was tasked with earlier in the year on the continued work with sustainability issues, how these issues are linked to financial regulation and supervision and how supervision can contribute to sustainable development in a constructive manner.
This report presents the outcome of a survey conducted by FI in which firms in different parts of the financial sector account for if and how they work with, in general, sustainability questions and, more specifically, climate-related issues.
The firms included in this analysis include insurance companies, banks, securities companies and fund management companies. The results show that firms interpret the term "sustainability" in different ways, and the approach is dependent on the size of the firm, business model and level of demand from customers. This analysis also shows that financial firms are clearly aware that sustainability represents both a risk and an opportunity, but that they make different assessments about the importance of sustainability for their operations.
This analysis shows that it is primarily large firms and firms that are part of a larger group that work actively with sustainability issues. It is primarily these firms that have guidelines and measurable goals and regularly follow up on these goals. This group of firms also often collaborates with other actors through national and international networks.
This report discusses matters of principle on the financial markets and the role of financial supervision in the area.
FI draws the conclusion that the work related to the existing goals for its supervision – stability, consumer protection, efficient markets – provides crucial support for environmental policy. For example, well-functioning capital markets are extremely important for managing the large, climate-driven investment needs that we are facing. However, it is also necessary to have a general, underlying environmental policy to provide the proper price signals in terms of fossil fuels vs. non-fossil fuels. Financial regulation and supervision can act as a supplement but cannot replace emissions regulations as an environmental policy tool.
At the same time, climate risks that directly affect financial firms are placing new demands on supervision, and work in this area needs to develop.
FI highlights several areas that require action. For example, it is necessary to follow up within the industry how international proposals can be implemented when it comes to definitions and measurement methods, work with scenario analyses, etc. Not all firms will need to work with these proposals in the same manner and to the same extent, but all firms will need to assess them. There are also important questions on the consumer market which require further investigation, for example how different asset managers inform customers about what they mean in concrete terms when selling services that are described as "sustainable" or "environmentally friendly".