The report, entitled Lenses and Clocks: Financial stability and systemic risks, provides an overview of the developments during the financial and economic crisis of 2007–2012 and the ongoing response to that crisis, and then highlights a number of areas related to the "re-engineering" of the global financial system, relating sustainable finance and investment thinking to these areas.
The report laments the focus on 'short-term' outcomes and analyses some of the initiatives and policy responses to issues identified from the global financial crisis. In critiquing the global convergence of accounting standards, the report notes:
It appears... that international efforts to bring about convergence around one standard, the International Financial Reporting Standards, have faltered and the accounting community has to a large degree accepted that, at this stage, an integrated global accounting system is beyond its reach, with many of the key unresolved issues still on the table in 2012. Agreement over the valuation and pricing of banking assets, notably the complex financial products such as derivatives that sat at the heart of the initial sub-prime crisis in the United States, as well as loans and loan-like instruments, appear to be, once again, at the epicentre of the schism across the accounting world.
The recommendations of the report are outlined as a series of four 'propositions':
- Proposition 1: Build a deeper understanding of how policy-makers, market regulators and international financing institutions can support the growth and main-streaming of responsible investment and inclusive finance approaches.
- Proposition 2: Establish a monitoring body, which ensures that global financial architecture is managed on sustainable fiduciary principles.
- Proposition 3: Investigate why long-term pension investment has not resulted in a financial system that more obviously serves the interests of savers and supports global sustainability.
- Proposition 4: Build on the work of the Integrated Reporting Committee and others to promote transparency in the operations of financial and commercial organisations.
The recommendations on proposition 4 include a call for a new protocol on integrated reporting which would cover at least all listed entities on the 50-plus major stock exchanges of the world:
The international community should agree to the adoption by stock exchange authorities and market regulators worldwide of a United Nations protocol that requires listed entities to abide by an integrated reporting standard covering sustainability issues promoting transparency in the operations of financial and commercial organizations. Such a protocol would build on the work of the International Integrated Reporting Committee and would embed a requirement to include a vote on the quality of the integrated report at the annual general meetings of listed corporations.
Click for access to the full report (link to the UNEP-FI website)