an african vision for sustainable finance dr. patrick njoroge ( 822 words ) on september 22, 2019, on the eve of the united nations ( un ) climate action summit, the un launched the principles for responsible banking, with 130 banks collectively holding usd 47 trillion in assets or one third of the global banking sector signed up. in these principles, the banks commit to strategically align their business with the goals of the paris agreement on climate change and the sustainable development goals ( sdgs ) and massively scale up their contribution to the achievement of both. it is gratifying to note the strong presence of african banks, including kcb bank, in the list of founding signatories to implement the principles. sustainable finance has gained traction particularly after the global financial crisis in 20072008. the crisis was in part fuelled by the short termism of the global financial sector. the short - term drive for profits trumped more long term societal good. sustainable finance takes a long term view and integrates environmental, social and governance criteria in business and investment decisions for the benefit of customers and society at large. green finance is a critical component of sustainable finance and refers to raising capital and financial investments into companies, services, products and projects that accelerate the development of an environment friendly and climate - resilient economy. sdg 8 captures the essence of sustainability as it seeks ‘ to promote sustained, inclusive and sustainable growth, full and productive employment and decent work for all. ’ in particular, sdg 8 emphasizes the strengthening of the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all. globally, about usd 5 - 7 trillion per year is required to implement the sdgs with developing countries facing an annual investment gap of usd 2. 5 trillion in areas such as infrastructure, water and sanitation and agriculture. the bridging of this funding gap will require global partnerships, deepening of financial and capital markets and leveraging on innovation. africa has not been left behind in the sustainable finance agenda, but much more remains to be done. africa contributes least to global pollution but is impacted the most. for instance, it is estimated that africa is responsible for only 4 percent of global greenhouse gas emissions, yet 65 percent of the population of the continent is considered to be directly impacted by climate change. african countries akin to other developing countries globally also face a significant funding gap in meeting the sdgs. the need for sustainable finance is therefore critical and immediate for african countries

sabine lautenschlager : taming the fire statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, at the credit risk 2017 forum, vienna, 23 march 2017. * * * theodore roosevelt is supposed to have said : “ risk is like fire : if controlled it will help us ; if uncontrolled it will rise up and destroy us ”. i think that describes quite well the modern financial world and its risks. managing financial risks is a bit like controlling a fire. it ’ s the job of chief risk officers, the cros, to constantly remind decision - makers about the “ fire safety rules ”. the recent financial crisis showed how important that job is. it ’ s a job that requires cros to be steadfast and to speak unpleasant truths from time to time – just like banking supervisors have to do. it ’ s regulation that helps us to do our job. regulation seeks to control risks as well. following the devastating “ fire ” of the financial crisis, we have overhauled the rules for banks. we have mended them, strengthened them, and expanded them. that was the correct and necessary thing to do. but now it is time to finish the job. more than eight years after the crisis, banks need regulatory certainty. but the job needs be finished at the global level. the financial system is global and so should be the rules that govern it. you cannot enjoy fresh air on your patch of land while there is a fire raging on your neighbour ’ s – sooner or later the wind will blow smoke and sparks over the fence. against that backdrop, i welcome the fact that, last weekend, the g20 have confirmed their support for the work to finalise basel iii. but there are still some voices who question the general extent of the regulation. to be crystal clear : it would be wrong to soften the rules. this would just prepare the ground for the next crisis. i cannot deny, though, that rules put a burden on those who have to comply – the banks, that is. in that regard, it is often claimed that the burden on banks translates into a burden on the economy. it ’ s said that banks could no longer pursue their traditional business because the capital requirements are too strict. it ’ s also said that new business models would not make economic sense because of the regulatory cost. all that would hurt