This study examines how financial systems can better support the transition towards low-emission and climate-resilient development, drawing on case studies from Mexico, South Africa, Thailand and Uganda. It explores how governments, regulators, central banks and financial institutions can manage climate-related financial risks while redirecting capital towards climate-compatible investments. The study focuses on key areas including sustainable finance policies, taxonomies, disclosure and reporting, climate-risk management, green financial products, capacity building and international cooperation.
The four country cases illustrate different stages and approaches to sustainable financial-system development:
- Mexico has been an early mover in sustainable finance, including becoming one of the first emerging markets to issue green bonds. The study highlights ongoing work on sustainable finance regulation, taxonomy development and climate-risk assessment.
- South Africa has a comparatively advanced sustainable-finance framework, with progress on ESG and climate-related disclosure, a green finance taxonomy, and a climate-modelling framework for financial stress testing. Strong stakeholder engagement has also supported the development of its sustainable-finance agenda.
- Thailand shows strong coordination between public and private financial-sector actors. Key developments include work on a green taxonomy, climate stress testing and coordinated action through the country’s Working Group on Sustainable Finance.
- Uganda is at an earlier stage of climate-compatible financial-system development, but the study identifies increasing political attention to sustainable finance and growing recognition of the financial sector’s role in addressing climate change.
Across the four countries, the study finds that clear political signals, common definitions and taxonomies, better climate-related data and disclosure, stronger risk-management frameworks, appropriate financial instruments and institutional capacity are important for accelerating the transition towards climate-compatible financial systems.
