RFP2502 AFI WG Guideline Note: “IGF as a Pathway to Proportionate Sustainable Finance Standards”

1. Background:

The Alliance for Financial Inclusion

The Alliance for Financial Inclusion (AFI) is the world’s leading organization on financial inclusion policy and regulation. Currently, 90 member institutions make up the AFI network including central banks, ministries of finance and other financial policymaking or regulatory institutions from over 84 developing countries and emerging markets. AFI empowers policymakers to increase the access and usage of quality financial services for the underserved through sustainable and inclusive policies and an effective use of digital technologies.

Policies developed and implemented by AFI members contribute to a range of the Sustainable Development Goals. By Setting their own agenda, AFI members harness the power of peer learning to develop practical and tested policy reforms that enhance financial inclusion with strategic support from both public and private sector partners.

AFI has 7 Working Groups (WG): Consumer Empowerment and Market Conduct Working Group (CEMCWG), Digital Financial Services Working Group (DFSWG), Financial Inclusion Data Working Group (FIDWG), Financial Inclusion Strategy Peer Learning Group (FISPLG), Global Standards Proportionality Working Group (GSPWG), Inclusive Green Finance Working Group (IGFWG) and SME Finance Working Group (SMEFWG),

As the key source of policy developments and trends in financial inclusion and as the primary mechanism for generating and incubating technical content in the network, the Working Groups serve as “communities of practice”. Providing a platform for knowledge exchange and peer learning among policymakers to share, deliberate and deepen their understanding, the working groups offer leadership and expertise in their respective policy fields and support the network to monitor new developments in emerging fields.

The knowledge generated via the working groups is disseminated for implementation by a range of capacity building activities such as Joint Learning Programs, Member Trainings, Trainings by Private Sector Partners. The practical experience members garner from engaging in peer learning based capacity building is then applied by members as in country implementation projects which are supported by the provision of financial or technical support to AFI member institutions in conducting activities that aim to deliver financial inclusion policies, regulations, supervisory tools or enablers for the development of policies, such as national financial inclusion strategies.

The working groups receive strategic guidance and insight from the High-Level Global Standards & Policy Committee, while the Gender Inclusive Finance Committee, supports WGs in integrating gender considerations into all aspects of their work and support members in fulfilling their Denarau Action Plan (updated 2022) commitment to promote women’s financial inclusion.

AFI members have made further commitments in a range of other accords which can be read here.

The AFI’s five regional initiatives complete the AFI platform of services by supporting policy implementation in Africa (AfPI), Latin America and the Caribbean (FILAC), the Pacific Islands (PIRI), Eastern Europe and Central Asia (ECAPI) and the Arab Region (FIARI).

2. Project Background:

IGF as a Pathway to Proportionate Sustainable Finance Standards

The financial sector plays a crucial role in supporting the transition to a more sustainable future. As a leading organization in financial inclusion policy and regulation, AFI is uniquely positioned to contribute to global sustainable finance initiatives through its network of 90 member institutions from 84 countries, comprising central banks and financial regulatory institutions from developing and emerging economies.

The demand for sustainable and green finance has surged in response to the growing need to address climate change, promote long-term economic resilience, and support the transition to a low-carbon economy. As part of the international response to climate change, global standard setting bodies (SSBs) are starting to adopt and implement new global standards for sustainable finance, intended to encourage consistency and interoperability.

The publication by the International Sustainability Standards Board (ISSB) in 2023 of its two disclosure standards was a notable achievement, with the standards welcomed and endorsed by financial SSBs including the Financial Stability Board (FSB), International Organization of Securities Commissions (IOSCO) and Basel Committee on Banking Supervision (BCBS). AFI members including Bangladesh, Costa Rica, Kenya, Malaysia, Nigeria, Pakistan, Philippines, and Sri Lanka and have begun adopting and utilizing these ISSB standards. The G20 also welcomed the standards, whilst noting the importance of taking into account country-specific circumstances while implementing them. Building on the ISSB standards, the BCBS is also in the process of finalizing its Pillar 3 disclosure framework for climate-related risks intended to promote consistent disclosures by international banks.

Such global standards are vital to ensure consistency and interoperability of implementation across jurisdictions. Nonetheless, their implementation must be in a proportionate and flexible manner to ensure that they do not give rise to unintended consequences for financial inclusion, e.g. impacting the cost of capital for vulnerable communities, or placing disproportionate reporting requirements on micro, small, and medium enterprises (MSMEs). The integration of climate risks into financial regulatory frameworks must therefore be designed with an inclusion lens in order to ensure positive outcomes for both financial stability and financial inclusion.

Since 2018, AFI members have pioneered the approach of Inclusive Green Finance, an approach focusing on the intersection of financial inclusion and environmental goals. Under this approach, AFI members have identified a set of financial policies, regulations and initiatives designed to promote environmental sustainability while ensuring financial inclusion for underserved and climate vulnerable groups, including low-income households, smallholder farmers and micro, small and medium enterprises (MSMEs). The extensive policy guidance, tools and case studies developed by AFI’s IGFWG can be utilized to support a proportionate application of the emerging global financial sustainability standards, through a human centric approach emphasizing the impact on vulnerable individuals, businesses, and communities.

Given these developments, it is crucial to understand the implications of emerging global sustainable finance standards for central banks and prudential and financial stability authorities, and how AFI’s IGF approach can be utilized to support proportionate implementation which contributes to environmental goals whilst avoiding exclusionary impacts. AFI’s IGFWG and GSPWG therefore wish to develop a guideline note “IGF as a Pathway to Proportionate Sustainable Finance Standards” to assess the implications of emerging global standards for AFI members, their potential impact – both positive and negative – on financial inclusion, and how the AFI IGF approach and tools can be used to support effective and proportionate implementation.

With the aim for the report development to be undertaken in Q1 2025, members of AFI’s GSPWG and IGFWG will provide inputs to the Guideline Notes as part of a joint IGFWG-GSPWG Task Team (‘Task Team’) to contribute to the development and drafting of this Guideline Note, with the support of an external consultant procured through this RFP process.

Background: AFI Guideline Notes. Guideline Notes provide practical brief policy guidance on any given topic within the realm of a Working Group. Since Guideline Notes can only be published when approved by all the members of a specific working group, they convey a consensus view from the network on key parameters for successful implementation of a specific category of financial inclusion policy. The primary target audience for a guideline note is technical level staff and decision makers within AFI’s membership to support the practical implementation of policy reforms through adapting the guidance to the needs in specific member jurisdictions. The expected length of a Guideline Note is 25-40 pages including all references, figures and tables, and bibliography. Examples of knowledge products in this format may be found on the AFI website.

3. Overall Objective:

The updated Guideline Note will seek to:

• Provide a comprehensive overview of the evolving sustainable finance landscape, and the incorporation of sustainable finance and climate risk considerations within the work of global financial standard setting bodies (SSBs);
• Outline key definitions, principles, and frameworks while analyzing challenges and opportunities for AFI members (principally central banks and other prudential and financial stability regulators), in implementing sustainable finance policies and regulations;
• Analyze how provisions for proportionality in the standards can inform countries’ implementation strategies and how they can be utilized to mitigate the potential for unintended exclusionary impacts, for example with regards to MSME reporting.
• Identify how AFI’s IGF approach can be incorporated into sustainable finance standards implementation to ensure a human centric approach and positive outcomes for disadvantaged groups in developing countries;
• Raise awareness amongst policymakers, regulators, and other relevant stakeholders in developing and emerging markets of the key policy considerations to adopt sustainable finance standards in a manner that is both effective and equitable.

4. Scope of Work:

The development of this Guideline Note will involve the following project components, as described below:

4.1 Project Management and Coordination:

• Develop a detailed project plan with timelines and milestones.
• Ensure timeliness of completion of the deliverables.

4.2 Literature Review and Stakeholder Consultation:

• Conduct a review of existing literature on sustainable finance standards (e.g. ISSB etc.), and initiatives by key financial standard-setting bodies (e.g., IOSCO, FSB, BCBS) related to their adoption/dissemination of new sustainable finance standards and incorporation of climate risks. This should include an assessment of the interoperability and consistency of existing standards and other international best practices.
• Review the adoption of sustainable finance standards by AFI member countries and identify the challenges and opportunities that need to be addressed.
• Develop lines of inquiry and conduct approximately 10-12 key informant interviews with a selection of AFI members (as identified by AFI) and key external stakeholders in order to obtain feedback on the adoption of these standards.
• Collect input and feedback in a detailed and systematic manner for the development of the Guideline Note.

4.3 Analysis of Implications for Central Banks and Prudential Regulators:

• Analyze the implications of sustainable finance standards on central banks and prudential regulation.
• Focus on the specific challenges and opportunities for central banks in developing and emerging markets.
• Examine the socioeconomic impacts of climate-related financial risks on vulnerable populations.

4.4 Challenges, Opportunities, and Recommendations:

• Identify the main challenges faced by AFI members in implementing sustainable finance policies and regulations.
• Explore opportunities and best practices to overcome these challenges, with reference to how proportionality and the AFI IGF approach can be utilized to support sustainable finance standards’ implementation.
• Develop recommendations for the proportionate and inclusive implementation of global sustainable finance standards by the AFI membership.

4.5 Coordination and Report drafting:

• Lead the drafting of the Guideline Note, coordinating inputs from AFI management unit and members. The report should compile and synthesize relevant data and insights from the gap analysis, literature review and key informant interviews into a clearly structured report articulating challenges, opportunities and policy recommendations, and aligned to AFI’s Guideline Note format.
• Respond to and incorporate feedback from AFI management unit, AFI members, and any external reviewers on drafts of the guideline note and prepare a final version reflecting feedback and suggestions received.

5. Timeline & Deliverables:

The assignment is expected to commence in February 2025 and end by April 2025. Below is the tentative timeline:

Refer link in ‘How to Apply’ section for more detailed information.

6. Travel:

No travel is expected for this assignment. The consultant(s) will work remotely and undertake virtual meetings to complete the tasks.

7. Consultant Experience:

The consultant(s) must possess the following qualifications and experience:

• A minimum of 10 years of relevant experience in financial sector policymaking, regulation, and sustainable finance, complemented by an advanced university in a relevant field (e.g., finance, economics, public policy, or environmental studies).
• In-depth knowledge of strategies, policies, and regulations that promote sustainable finance and financial inclusion in developing countries. The candidate should demonstrate a proven ability to analyze and evaluate the effectiveness of existing financial inclusion laws, policies, and regulations, particularly in the context of sustainable development and financial stability.
• Prior experience in updating or developing guidelines, frameworks, or policies related to sustainable finance or financial inclusion is essential.
• Strong analytical and quantitative skills, with the ability to synthesize complex information into clear, actionable recommendations. Excellent oral and written communication skills are required to effectively convey findings and engage with stakeholders.
• Demonstrated sound policy judgment and the ability to assess the implications of policy interventions on inclusive growth and resilience in the financial sector.
• Strong interpersonal skills and a collaborative team spirit are essential for engaging with diverse stakeholders and facilitating consultations throughout the guideline update process.

Candidates shortlisted for the position may be asked to undertake a quantitative test and an interview as part of the selection process.

8. Reporting:

Throughout the contract period, the Consultant will be reporting to the Project Lead from the AFI MU supporting this assignment.

9. Payment Terms:

The payment terms/schedule proposed for this consultancy are as following:

Refer link in ‘How to Apply’ section for more detailed information.

10. Administrative Information:

10.1 Disclaimer

The final decision on selection of a firm for this project rests with AFI management team and with the Inquiry. Only shortlisted and successful firms will be contacted.

10.2 Proposal Submission Information:

Proposals will be due with the following requirements for submission:

Refer link in ‘How to Apply’ section for more detailed information.

11. Evaluation Criteria:

The proposals submitted will be evaluated based on the following criteria:

Refer link in ‘How to Apply’ section for more detailed information.