States and more generally public authorities will not finance the transition to a low-carbon and climate-resilient economy on their own. Private financial actors have a key role to play and, over the past decades, they have taken numerous initiatives to promote "responsible investment" and "sustainable finance". However, the impact of these initiatives is far from commensurate with the climate challenge, and financial regulation must play a role.
This I4CE study analyses the different objectives that regulators can pursue to help the financial sector respond to the climate urgency, and provides an overview of the instruments at their disposal. It also highlights the challenges of implementing these instruments and identifies those that need to be used in the short term and those that need more time to be implemented.