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Nick Robins is co-director and Jeremy McDaniels is program manager at UN Environment's Inquiry into the Design of a Sustainable Financial System. Toby Heaps is CEO of Corporate Knights.

The road to a sustainable economy was never going to be easy. U.S. President Donald Trump's decision to pull out of the Paris climate agreement exemplifies the type of bumps we're likely to see along the way. Yet the recent G7 Environment Ministerial Meeting held in Bologna, Italy, showed – bumps and all – that we are definitely on the right road, heading irreversibly toward a cleaner, more prosperous and more inclusive economy.

Importantly, one of the key drivers of this shift is coming from the financial sector. The world's banks, investors and insurance firms know that climate change is real – and that it's threatening the stability of the financial system on which billions depend. Central banks and financial regulators are starting to incorporate climate risk into both prudential rules and reporting frameworks. New markets are also growing rapidly: Issuance of green bonds has grown nearly eight times in the past three years to reach $81-billion (U.S.) in 2016, and is heading for $150-billion this year.

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So, it's no surprise that one of the areas of real agreement in Bologna by all G7 members – the U.S. included – was the recognition that sustainable finance is "fundamental" to achieving environmental and climate goals. Three of the G7's leading financial centres – Frankfurt, London and Paris – have already launched strategic initiatives to seize the commercial opportunities from this powerful trend, and a network is being formed to bring together centres committed to sustainability. This is a fast-moving arena and much more still needs to be done to mobilize capital. According to a recent report from the OECD commissioned by the German government, we need to invest $6.9-trillion each and every year between now and 2030 to hit the 2C global warming target agreed to in Paris. This is $600-billion per year more in terms of upfront investment than a business-as-usual scenario – as clean technology generally replaces continuing resource use with human ingenuity and technology. Yet the payoff is impressive, with average annual fuel savings of $1.7-trillion a year.

There is no cookie-cutter template on how to align the financial system with sustainable development, but a number of key ingredients are emerging. National-level road maps can be useful to bring together private sector expertise with policy frameworks. G7 host Italy has just completed a national dialogue on sustainable finance, jointly launched by the finance and environment ministers with the central bank Governor. The European Union is also in the midst of a review conducted by a high-level expert group to hard-wire sustainability into its financial policies and regulations.

Improving market data is critical to enable investors to make informed choices in the face of growing sustainability challenges. The Financial Stability Board's industry-led task force on climate disclosure will present its final set of recommendations at the end of the month. These will apply to both corporations as well as the financial sector itself and, importantly, will provide a consistent framework for reporting on both past performance as well as future risks and opportunities. The Canadian Securities Administrators Climate Change Disclosure Review Project has the potential to put Canada at the forefront of this keystone activity.

Finding ways to finance the new crop of entrepreneurs that will drive the innovations we need is also crucial. Indeed, how we can close the sustainable financing gap for small and medium-sized enterprises (SMEs) was one of the themes of the Bologna meeting. Here, Business Development Bank of Canada (BDC) has established a strong track record of supporting clean-tech ventures with vital patient capital. Securitization can also make the green bond market relevant for SMEs. And fintech is offering a way to broaden the capital base for green entrepreneurs through platforms such as Abundance in the U.K. and CoPower in Canada.

The G7 baton will move from Italy to Canada in 2018, with the heads of state summit taking place in La Malbaie, Que. In Bologna, Environment Minister Catherine McKenna outlined that fighting climate change and unlocking the potential of clean economic growth would be one of the next year's priorities for the G7. Scaling up the emerging leadership in clean, green finance both from within Canada and across the G7 looks like it will be one of the most powerful ways of realizing this potential.

Editor’s note: An earlier version of this story included an incorrect reference to the Canadian Standards Association Climate Change Disclosure Review Project. In fact, it should have said the Canadian Securities Administrators Climate Change Disclosure Review Project.
During a live debate on climate change and the Canadian economy, Tony Keller asked Maren Smith, executive director of Clean Energy Canada how an increased cost for carbon emissions might affect Canadian pocketbooks. Globe and Mail Update
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