How Banks Can Impact Sustainability and Development

Global banking reforms target climate and nature ahead of 2026 UN summit

Banks face mounting pressure to redirect capital toward climate action and nature protection. The 2026 UN Financing for Development Forum, scheduled for April 20-24 in New York, will test whether financial institutions can deliver on sustainability commitments at the scale required.

Recent guidance from the UN Environment Programme Finance Initiative provides a framework for banks to integrate environmental considerations into core operations. Meanwhile, the Baku to Belém Roadmap, agreed at the 2025 UN climate summit, sets a target of $1.3 trillion annually in international finance for emerging markets and developing countries by 2035.

For UK businesses working with banks or seeking finance, these shifts carry practical implications. Lending criteria are changing. Risk assessments now factor in nature-related dependencies. Access to capital increasingly depends on demonstrable sustainability credentials.

Public development banks commit $700 billion for nature protection

The finance gap for nature protection stands at $700 billion annually, according to UN Environment Programme Finance Initiative analysis. Over half of global economic value depends on natural systems. Consequently, banks are beginning to treat nature-related risks as material financial concerns rather than peripheral issues.

Public Development Banks, working through the Finance in Common platform launched in 2020, have committed to redirecting flows toward low-carbon and climate-resilient growth. The platform unites multilateral, regional, national and local banks. Moreover, it coordinates action across institutions that collectively hold significant capital deployment power.

The New Development Bank, operating under its 2022-2026 strategy, has achieved 31% climate finance in its portfolio when excluding COVID-related loans. In 2024, over 55% of approved funding targeted climate projects. The bank aims to reach 40% climate finance overall, with 30% denominated in local currencies to reduce exchange rate risks for borrowers.

More than 350 banks have joined the Principles for Responsible Banking Nature Community of Practice. These institutions are working to integrate nature-related considerations into governance structures, risk frameworks and investment strategies. However, progress remains uneven across the sector.

Colombia demonstrates how national reforms unlock sustainable finance flows

Colombia’s Integrated National Financing Framework provides a concrete example of policy reform driving capital allocation. The framework influenced over $89 billion in SDG-aligned financing through coordinated public and private sector action.

The reforms worked by aligning national development priorities with bankable project pipelines. Financial institutions received clearer signals about government priorities. As a result, capital flowed more readily to projects with measurable sustainability outcomes.

This model demonstrates that effective regulation can enable rather than constrain finance. Banks need policy certainty to assess long-term risks and opportunities. National frameworks that define sustainability priorities reduce ambiguity in lending decisions.

For UK businesses, similar dynamics are emerging. Public procurement requirements increasingly favor suppliers with strong environmental credentials. Meanwhile, banks are tightening due diligence on supply chain emissions and nature-related dependencies.

New financing instruments emerge for ocean and water projects

Blue bonds represent one innovation in sustainable finance instruments. These bonds fund projects related to ocean health, water management and marine ecosystem protection. The UN Environment Programme Finance Initiative has developed principles for blue bond issuance in partnership with the International Capital Market Association.

CAF, the Development Bank of Latin America and the Caribbean, issued a Blue LAC Bond in 2025 using these principles. The instrument raised capital specifically for coastal resilience and sustainable fisheries projects across the region.

Such instruments matter for businesses in sectors dependent on water resources or marine inputs. Food manufacturers, beverage companies and agricultural suppliers face growing scrutiny over water use. Consequently, access to blue bond financing could become relevant for UK firms with operations in water-stressed regions or marine-dependent supply chains.

The broader trend shows capital markets developing more granular instruments tied to specific environmental outcomes. Banks are moving beyond general green bonds toward thematic financing linked to nature, water, biodiversity or circular economy projects.

South-South cooperation reshapes climate finance responsibilities

At the 2025 UN climate summit, negotiators agreed new terms for South-South cooperation in climate finance. Developing nations will act as both recipients and contributors of climate funding. This marks a shift from previous frameworks that positioned developing countries solely as aid recipients.

India’s leadership of the New Development Bank in 2026 may accelerate this transition. Enhanced cooperation between emerging economies could expand the bank’s project pipeline, particularly in clean energy, sustainable transport and climate resilience.

For UK exporters and investors, this creates new market dynamics. Emerging economies are building domestic capacity to finance and deliver climate projects. Therefore, UK firms may face increased competition from local players in these markets. However, opportunities also expand as project volumes grow.

The broader implication concerns supply chain finance. UK businesses sourcing from emerging markets will encounter suppliers with better access to sustainability-linked capital. This could reduce supply chain risks but may also raise baseline expectations for environmental performance across supplier networks.

Financial institutions must address material risks from nature loss

Banks are beginning to recognize nature-related risks as financially material. Agricultural lenders face exposure to pollinator decline affecting crop yields. Property portfolios carry flood risks linked to wetland degradation. Supply chain finance depends on stable water availability and soil health.

The Taskforce on Nature-related Financial Disclosures provides a framework for assessing these dependencies. Banks using this approach identify which loan portfolios or asset classes carry significant nature-related exposure. They then adjust risk pricing and lending criteria accordingly.

For UK businesses, this translates to more detailed environmental due diligence in loan applications. Lenders are asking specific questions about water sources, biodiversity impacts and ecosystem dependencies. Companies without clear answers may face higher borrowing costs or reduced access to capital.

Manufacturing firms using natural inputs should particularly note this shift. Banks are scrutinizing supply chains for deforestation risks, water stress and habitat conversion. Businesses that can demonstrate sustainable sourcing practices gain competitive advantage in accessing finance.

What the 2026 UN forum means for business access to capital

The 2026 Financing for Development Forum will review implementation of the Sevilla Commitment. This agreement, reached in 2025, outlines reforms to scale up SDG investments and restructure international financial architecture.

UNDP has stated it will work with governments, international financial institutions and private investors to translate global financing commitments into country-level results. The emphasis on country-level implementation matters for businesses operating across multiple jurisdictions.

Different countries will adopt varying approaches to implementing international financing commitments. UK firms should monitor how key markets translate global agreements into national policy. Regulatory requirements, tax incentives and public procurement criteria will reflect these national interpretations.

The Financing for Sustainable Development Report 2026 offers concrete recommendations to reform international financial architecture. These proposals, if adopted, would change how development banks operate and how they mobilize private capital. Consequently, the terms on which UK businesses can access development finance may shift.

Essential facts about banking reforms and sustainability finance

• The 2026 UN Financing for Development Forum takes place April 20-24 in New York, setting the agenda for sustainable finance reforms through 2030.
• The Baku to Belém Roadmap targets $1.3 trillion annually in international finance for emerging markets by 2035, focused on clean energy, adaptation and nature protection.
• Public Development Banks, coordinated through Finance in Common since 2020, are redirecting capital toward low-carbon and climate-resilient projects across multilateral, regional and national institutions.
• More than 350 banks have joined the Principles for Responsible Banking Nature Community of Practice, committing to integrate nature-related considerations into lending and investment decisions.
• Colombia’s Integrated National Financing Framework influenced over $89 billion in SDG-aligned financing, demonstrating how policy reform can unlock sustainable capital flows.
• Blue bonds, following UN Environment Programme Finance Initiative principles, provide dedicated financing for ocean health and water management projects.
• The New Development Bank achieved 31% climate finance in its portfolio, with over 55% of 2024 approvals targeting climate projects and a goal of 30% lending in local currencies.

How UK businesses should prepare for changing lending criteria

Banks are embedding sustainability metrics into credit assessments. This shift affects businesses seeking loans, overdrafts or trade finance. Companies should anticipate more detailed questions about emissions, supply chain practices and natural resource dependencies.

Financial institutions increasingly use frameworks like the Taskforce on Nature-related Financial Disclosures to evaluate borrower risk. Firms that can provide data on environmental performance will find applications processed more smoothly. Those without such information may face delays or unfavorable terms.

Businesses in sectors with significant environmental footprints should consider external verification of sustainability claims. Banks are becoming skeptical of self-reported data without third-party validation. ESG compliance support and carbon reporting services can help establish credibility with lenders.

For companies pursuing growth capital, demonstrating alignment with climate and nature goals can expand financing options. Green loans and sustainability-linked facilities offer preferential rates. However, these instruments require measurable targets and regular reporting against defined metrics.

Public sector suppliers face additional considerations. Government procurement increasingly favors bidders with strong sustainability credentials, particularly for contracts above certain thresholds. Carbon reduction programs that meet PPN 06/21 requirements have become commercially relevant, not merely compliance exercises.

Why private capital mobilization depends on public bank reforms

Public Development Banks enable private investment through de-risking mechanisms, capacity building and financial innovation. These institutions absorb first-loss positions, provide guarantees and offer concessional terms that make projects viable for commercial lenders.

Currency risk management represents one critical area. Many sustainable projects in emerging markets generate revenues in local currency but require capital raised in hard currencies. Public banks can structure facilities that mitigate exchange rate exposure, making projects attractive to private investors.

For UK firms investing in emerging markets, these mechanisms matter directly. Projects that appeared financially marginal may become viable through public bank participation. Therefore, businesses should monitor development bank pipelines for co-investment opportunities.

The Finance in Common platform argues that unlocking public development bank potential is crucial to addressing the scale and urgency of sustainability challenges. The platform recommends sustainability integration across operations and coordination with multilateral development bank reforms.

However, challenges persist. With only five years remaining to achieve Sustainable Development Goals, progress lags targets. Regulatory frameworks must evolve to enable rather than constrain sustainable finance. Moreover, the quality of SDG-aligned finance matters as much as the quantity.

Where to find authoritative guidance on sustainable banking reforms

The UN Environment Programme Finance Initiative publishes frameworks and guidance for financial institutions integrating sustainability. The organization’s Nature Journey roadmap provides specific steps for banks on governance, risk assessment and strategy development.

The Department for Energy Security and Net Zero offers UK-specific policy guidance on climate finance and net zero transitions. Businesses should monitor departmental updates on sustainable finance regulations and disclosure requirements.

For businesses seeking practical implementation support, training on Scope 3 emissions and supply chain sustainability can build internal capacity to meet evolving lender expectations. Understanding technical frameworks helps businesses communicate effectively with financial institutions about environmental performance.

The Finance in Common platform tracks public development bank commitments and provides data on sustainable finance flows. UK businesses can use this resource to identify potential financing partners and understand regional priorities.

The 2026 Financing for Sustainable Development Report, when published, will detail implementation progress on the Sevilla Commitment. This document will provide concrete recommendations on scaling SDG investments and reforming international financial architecture, offering insight into how global commitments translate to national policy changes affecting UK businesses.