Clean Growth

Green finance. What does this mean for international economies?

By July 9, 2019 No Comments

Last week’s third Green Finance Summit held at The London Guildhall, saw the launch of the Green Finance Institute, which coincided with the Governments new Green finance Strategy.

The Green Finance Institute Launched by Dr. Rhian-Mari Thomas, CEO of the Green Finance Institute, one main workstreams will be tackling will be working side by side with central banks and supervisors. A new era for green finance by the UK for the World. (1)  The Lord Mayor of London also made the bold statement “It is now time for green finance to go mainstream.”

As part of the launch, ‘Chartered Banker Institute’ launched the ‘Green Finance Certificate’ Here is what they have to say about the need for the relevant green finance & clean growth certification in the face of advancing climate change:

‘Managing climate-related risks and supporting the transition to a low-carbon world are our most significant global challenges. Achieving these requires the combined efforts of global bodies, national governments and the financial services sector, putting sustainability and stewardship at the heart of finance. To support the sector’s continued growth, finance professionals need to develop and demonstrate the knowledge and expertise of green finance principles and practice to help direct investments to support the transition to a low carbon world, address climate related risk, and explore green finance opportunities. The Green Finance Certificate™ was launched by the Chartered Banker Institute in 2018 as the first global, benchmark qualification for the growing Green Finance sector. The Certificate provides learners with a comprehensive overview and understanding of the evolving Green Finance sector, covering:

  • Scientific background to Green Finance – climate science and the transition to a low carbon world
  • Global, international and national responses to climate change
  • Climate-related financial risks, stranded assets and other environmental risks
  • Key Green Finance principles, including the UN Sustainable Development Goals, TCFD, Green Bond Principles and Green Loan Principles
  • Importance of monitoring and verification
  • Green Finance products and services (banking, insurance and investment)
  • Green FinTech
  • Ethical dimensions of Green Finance and the Role of the Green Finance Professional (2)

The very fact that this certification has now been made readily available & is being actively promoted throughout the finance sector; goes to show how the shift to ethical & green finance is becoming an accepted expectation throughout the finance sector.

Another keynote speaker at the GF Summit, was Sean Kidney CEO Climate Bonds Initiative London stated “One thing we need to shift money into the right direction is INNOVATION. We must get our act together!  One attendee at the summit also cited Sean Kidney as saying “It is rich countries’ privilege to be able to act – and therefore their responsibility” (1)

Green finance is a relatively new concept to the general public, but has been an initiative spearheaded by government for many years. The ideals of Green Finance lay in the need for a global financial system which supports the transition to a low carbon economy.

The Green Finance Strategy foreword by Rt Hon Greg Clark MP Secretary of State for Business, Energy and Industrial Strategy & Rt Hon Philip Hammond MP Chancellor of the Exchequer states Meeting our objectives will require unprecedented levels of investment in green and low carbon technologies, services and infrastructure. Green finance will be central to providing the flows of capital we need.’ (3)

With the Green Finance Strategy core objectives citing:

  • To align private sector financial flows with clean, environmentally sustainable and resilient growth, supported by Government action.
  • To strengthen the competitiveness of the UK financial sector. (3)

The environmental challenge’s we all face are well documented:

‘The Intergovernmental Panel on Climate Change’s (IPCC) Special Report on Global Warming of 1.5°C showed that humans have caused around 1°C of global warming since the pre-industrial era (1850-1900), with much greater warming in some regions, particularly the Arctic. Earth has experienced major climate shifts in the past, but since the 1950s, many of the changes are unprecedented over centuries to millennia. If greenhouse gas emissions continue at their current rate, global mean surface temperature could rise by more than 4°C above pre-industrial levels by 2100’ (3)

The United Kingdom’s ‘Green GB Week’ last year promoted “Financing the low carbon economy: Setting out the role of the finance sector in delivering clean growth”

Chris Dodwell, Director of climate change & clean growth at Ricardo addressing an event as part of GREEN GB week last year said:

“Globally the green finance sector is growing, but not fast enough to raise the trillions needed to meet the targets agreed in Paris. What the Climate Finance Accelerator has shown is that by establishing a focused dialogue between climate policymakers across the world and finance professionals in the City of London, we can speed up the process of accessing private sector finance for climate action, helping to overcome one of the greatest barriers to implementation.”

Andrew Whiley from Climate Initiative Bonds reiterated this point as part of the GF Summit “We are heading for a world of 3deg warming. Totally outside the experience of Homo Sapiens.” ‘But, we can have a world with a different kind of growth & sustainable opportunities.” “That’s why financial sector action is so important.” (4)

The general consensus from the media feeds throughout the GF summit was that there is the investment available to create a green finance system, it is how the finance sector encourages that investment into green finance & help investors to understand the validity of their investments that is the challenge.

Written by Katy-Jane Mason on behalf of Dolphin N2.