SBN Measurement Framework
The SBN Measurement Framework was developed by members and is based on their practical experiences and lessons learned over the past seven years. It reflects the elements that are consistently seen as essential to developing robust and effective national approaches to promoting sustainable finance. The Framework consists of three pillars based on 19 indicators and 55 underlying questions.
Maintaining a fundamental approach, the Framework will continue to evolve each year as members’ collective experiences and initiatives change and mature. It is designed to enable each member to review its progress against global benchmarks, build on its strengths, and identify ways to improve its approach to sustainable finance, whether it is mandatory, voluntary, or a combination of the two.
Pillar I: Strategic Alignment replaces the previous Enabling Environment pillar. It reviews the degree of alignment between national frameworks and global ESG standards, sustainability frameworks, and climate commitments. It also evaluates the degree of interagency collaboration and multi-stakeholder involvement at a national level.
Pillar II: Climate and Green Finance has been updated to capture efforts by members to provide definitions, guidance, monitoring, and incentives for FIs to introduce new products and services that support climate and green economy goals such as green bonds. It also evaluates support for FIs to manage their exposure to climate risk.
Pillar III: ESG Integration evaluates guidance and supervision strategies for a range of FI practices that effectively manage ESG risk in FI operations and transactions. A new enforcement indicator assesses incentive mechanisms and verification strategies.
The measurement framework used to assess and benchmark these efforts focuses on two dimensions:
i. The comprehensiveness, clarity, and enforceability of national sustainable finance policies and principles and their potential to transform financial industry practices; and
ii. The interaction between national frameworks and behavior change by private sector financial institutions, using both sector level data and individual case studies.
SBN Progression Matrix
Drawing on the three pillars in the assessment methodology, the Progression Matrix provides an overview of market-wide progress for all SBN countries across three typical stages of development: Preparation, Implementation, and Maturing, with each stage consisting of two sub-stages. The stage mapping is based on qualitative milestones and quantitative analysis related to (i) progress in developing and implementing national policies and principles, and (ii) industry uptake and practices.
The SBN Measurement Working Group
The SBN Measurement Working Group was launched in December 2016 at the 4th SBN Annual Meeting in Bali, Indonesia. It was a response to members’ calls for enhanced technical support to assist in designing and implementing national initiatives and guidance on sustainable finance.
The Working Group is comprised of 12 members representing 11 countries and one region. Supported by IFC, it led the development and update of the SBN Measurement Framework, which reflects a combination of relevant international standards and the evolving best practices from SBN members. By benchmarking market development against the Measurement Framework, the SBN Global and Country Reports are intended to be a tool and reference resource for SBN members, helping them to expedite the alignment of financial markets with sustainable development goals and climate change targets. The overall approach is summarized in the Figure: