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Green Finance


About

The Paris Agreement signed in December 2015 by over 195 countries sets out the commitment to protect and nurture the planet Earth from catastrophic impacts that are caused by the climate change. The main commitment of the agreement is to limit climate change to less than 2°C by the cooperation of governments around the world to play their part in transitioning to a low-carbon world. However, that cooperation alone won’t be enough to tackle this emerging issue for the world has been so developed by modernisation that there is several variation of actors whose roles are interconnected with the governments. This is why business actors, predominantly, have to also actively work towards sustainable development which can be achieved through the green finance, especially corporates and investors. If anything, businesses and financial institutions play a key role in the transition towards a sustainable economy. Meanwhile the general public, which in this case ranging from citizens to customers, is expected to actively show support in the green initiatives implementation.

Green finance presents as a medium and an initiative to increase level of financial flows from the public, private, and not-for-profit sectors to sustainable development priorities. It comprises three aspects which include, (1) the financing of public and private green investments in two areas of (i) environmental goods and services and (ii) prevention, minimisation of and compensation for damage to the environment and to the climate change, (2) covering the financing of public policies that encourage the implementation of environmental and environmental-damage mitigation or adaption projects and initiatives, and lastly (3) encompassing the components of the financial system that deal specifically with green investments. There are various ways can be achieved to promote and furthermore implement green finance, from changing the countries’ regulatory frameworks, harmonising public financial incentives, increases of green finance from different sectors, alignment of public sector financing decision-making with the environmental dimension of the SDGs, increases in investment in clean and green technologies, financing for sustainable natural resource-based green economies, and increase the use of green bonds. As mentioned before, businesses and financial institutions play a key role in driving the greening of financial system, which cover banks, institutional investors and international financial institutions (IFIs), as well as regulatory authorities and central bank.

Despite of the determination and exigency to adopt and implement the green finance model throughout all nations in the world, globally speaking the green finance sector hasn’t been growing in the expected rate. Private green finance, especially, is still scarce due to a range of microeconomic challenges, including problems in information asymmetry at the capital markets, inadequate analytical capacity of issuers and investors regarding the integration of ESG (Environmental, Social, Governance) to support green finance, a lack of generally accepted green definitions and maturity mismatches. In terms of society, there are also still a lot of people who are not aware of the very definition and concept of green finance itself. Thus, research on this topic will be aimed at analysing the opportunities and challenges faced in journey of wholly implementing green finance in daily economic activities for the long term. In addition, we also have the purpose of raising awareness of the existence and importance of green finance amongst civil society through this research.

Multi-Disciplinary Approach Involving:

  • Sustainable Finance
  • Renewable Energy
  • Green Economy