Dr. Joseph Torbey
Chairman – Union of Arab Banks’ Executive Committee
Chairman – World Union of Arab Bankers
“Financial stability and climate change”
Resilient economy for better planet
UN Office / Geneva
April 13th, 2022
Ladies and gentlemen,
On behalf of the Union of Arab Banks, I would like to welcome you all in this forum titled “Financial stability and climate change – Resilient economy for better planet”, which is organized at the time where the entire globe is still very concerned with climate change and environmental risks, despite the geopolitical crisis occurring in Europe.
Ladies and gentlemen,
One of the direct, and perhaps the most severe, effects of economic activities that are harmful to the environment, is the phenomenon of climate change.
Over the past years, there were repeated calls that traditional economic models need to be reformed in order to tackle climate change, biodiversity losses, and water scarcity, while addressing major social and economic challenges. This has led the economic sectors, including the banking sector, to realize that it is not possible to keep pace with the radical changes in the concept of development around the world, except by adopting new models that take into account environmental standards – specifically the so-called green banking and green finance.
Thus, banks have great responsibility – since they are the main financiers of economic sectors and activities in most countries – to be strict in financing projects or investments that are harmful to the environment, and to include among the conditions for providing credit, the environmental considerations and standards. In other words, when studying the economic and financial feasibility of the project to be financed, banks must study the environmental feasibility (or the environmental impact) of the project, and link their financing decision to its environmental impact.
Ladies and Gentlemen,
Combating climate change does not require major financial and economic sacrifices. In fact, smart environmental policy choices can yield economic, health, and climate gains at the same time. According to the World Bank, government policies that improve energy efficiency and public transportation systems can increase global economic output by more than $1.8 trillion annually. Also as another example, note that solid waste management alone accounts for between 20 and 50 percent of the budgets of cities around the world; nonetheless, addressing this challenge can produce great opportunities for economic growth and job creation.
In the United States of America alone, recycling industry generates about $235 billion annually, and employs more than one million people in 56,000 facilities.
The establishment of a green economy is closely linked to the efforts to promote sustainable consumption and production, given that stimulating investment in sustainable production increases the net profits at the level of welfare from economic activities. Moreover, green economy can use the productive capacity of natural capital, especially in formulating solutions for those who live below the poverty line and depend on nature for a large part of their livelihood.
Ladies and Gentlemen
The Union of Arab Banks has become concerned – like other regional and international organizations that support the implementation of the sustainable development goals – in facing environmental challenges, by building on the international agreements, following them up and setting up mechanisms within its mandate, to promote a culture of green economy, green finance, and green banking in the Arab region.
We also work on promoting an Arab green economy, by encouraging investments and lending that support the environment, and by organizing relevant conferences and seminars, which aim at spreading the awareness on “environmental economics” and “environmental banking”, and to shed light on the close relationship between the economy, finance and the environment.
Ladies and Gentlemen,
The Union of Arab Banks is actively contributing to supporting the sustainable development process in the Arab region, specifically in contributing to the eradication of poverty and hunger, combating inequality, building sustainable and secure societies, and protecting human rights. At the same time, we look forward to ensure the permanent protection of the Earth and its natural environmental resources. We also stress on the importance of the creation of appropriate conditions for sustainable economic growth, prosperity, well-being and opportunities for all, taking into account environmental standards.
Thank you for your attention.