Education and Capacity Building

EDUCATION & CAPACITY BUILDING

IGF requires knowledge of the social and economic structure of the particular country (to address the financial inclusion dimension) and understanding of the science that underpins sustainability assessments.

The needed scientific knowledge is broad indeed, spanning the environmental sciences, energy production, climate research, and the biological and chemical components of sustainability.54 Financial inclusion expertise may be available on demand as a consultancy service, but the consultant’s perspectives may well be affected by their own incentives and issues or the views of their donors.

For these reasons, regulators should encourage education and capacity building throughout the industry; they could further these, for instance, by sponsoring or endorsing inter-institutional staff and executive training.

For the same reasons, the capacity building of local financial regulators is extremely crucial. Just as regulators have had to build IT expertise to respond to the Fintech challenge, regulators need a new, broad range of expertise in the social and hard sciences to assess IGF factors, all the more so, if they are tasked with drafting and applying inclusive sustainability standards and rules.55

Internal capacity building efforts can take many forms, from executive-level coaching to department training, training of individual staff by external experts, and peer learning activities. While these activities will likely be ad hoc at the beginning, as institutional knowledge builds and IGF policy engagement becomes more intensive, a systematic learning system will likely be needed.

CAPACITY BUILDING IS ESSENTIAL IN IMPLEMENTING SUSTAINABLE FINANCE ROADMAPS

The Central Bank of Egypt (CBE), motivated by physical risks to property, infrastructure and land, and transition risks from global adjustments to lower carbon economies, developed its own Sustainable Finance Roadmap (SFR) and Sustainable Finance Guiding Principles (SP).

The CBE, after building capacity and raising knowledge within the organization and among relevant stakeholders, issued the SFR with four elements: capacity building; non-binding SP; gap analysis; and a mandatory regulation based on the SP. The CBE’s Guiding Principles on Sustainable Finance, in turn, rely on six main pillars: 1. Building the necessary capabilities and knowledge. 2. Enhancing sustainable finance. 3. Involving stakeholders. 4. Managing climate change risks. 5. Sustainability orientation of the banks’ internal activities and operations. 6. Reporting. The CBE’s sustainability department drafted the SP and SFR to increase the banking sector’s adoption of sustainable finance and sustainability in their internal activities. This entailed a gradual process in which building the sector’s capacity was vital, followed by market assessments through annual surveys and the development of a regulatory framework. Both the SP and SFR were carefully designed to ensure the sector remains competitive and undisrupted by abrupt policy changes. The CBE is currently developing a governance structure for operational aspects of sustainability reporting once the mandatory regulation comes into force.

Source: IGFWG. Ago 2022. Internal survey on ‘IGF Roadmaps’.

54 Pierre-Hugues Verdier. 2013. “The Political Economy of International

Financial Regulation.” 88 Indiana Law Journal 1405, 1439-1441. 55 Alliance for Financial Inclusion supra 15, and see, for example, Kirsty

Anantharajah. 2019. “The Climate Finance Initiative and Capacity

Building in Fiji.” Available at: https://regnet.anu.edu.au/news-events/ news/7701/climate-finance-initiative-and-capacity-building-fiji.