World Investment Report 2021 – Chapter V: Capital markets and sustainable finance
With a growing need to mobilize the vast sums of capital needed to meet the SDGs by 2030, the WIR Chapter V focuses on the global financial market ecosystem, or the upstream segment of the investment chain. Despite its qualitative differences from foreign direct investment (FDI), portfolio investment nevertheless offers a potential source of capital for sustainable development, and the ecosystem surrounding global capital markets is increasingly aligning itself with sustainable development outcomes, including the SDGs.
The past 25 years have seen the emergence of sustainability performance as something to measure and disclose to investors. The realization has taken root that sustainability issues represent a material risk to investors, as well as a potential systemic risk to the global financial market and ultimately to society at large, as demonstrated by the dire consequences of the COVID-19 pandemic. More recently, sustainability performance and ratings have expanded from company disclosure to an emphasis on fund disclosure and asset owners, such as pension funds. The past decade has also witnessed the accelerating growth of a sustainable investment market focused on equities and bonds.