Towards a performance framework for a sustainable financial system

This document proposes a unifying framework for evaluating the alignment of financial systems with sustainable and inclusive development. It introduces a performance framework based on five core principles: capital requirements, financial flows, resiliency, efficiency, and effectiveness. The framework aims to measure how well a financial system directs capital towards sustainability goals, its ability to withstand shocks from unsustainable practices, and the efficiency and effectiveness with which it incorporates sustainability-related information into asset pricing. By analyzing these interconnected principles, the proposed methodology provides a basis for comparing different financial market designs and developing indices to track progress. The ultimate objective is to create a new convention for understanding and shaping the relationship between finance and long-term, inclusive, and sustainable economic outcomes.