We are seeing a new generation of micro-credit systems, crowd funding and peer-to-peer lending that can scale up the development and deployment of green technologies.
two decades. Yet it is only in the past two to three years that a“ quiet revolution” has gotten underway in financial markets. UNEP’ s Inquiry into the Design of a Sustainable Financial System’ s flagship report last year took a deep dive into emerging practices, showcasing hundreds of examples of deals or supporting policies, ether focused on particular asset pools and managers, or broader governance structures. A key mover in greening financial markets is China. As the co-chair of the G20 green finance working group, China is the world’ s largest issuer of green bonds, is advancing environmental risk across financial sectors and has, since 2014, required the inclusion of green criteria within total financial liquidity.
International Cooperation and Domestic Sustainable Development Strategies Under China’ s presidency, the G20 has also integrated green finance into its formal work program, in the form of the G20 Green Finance Study Group which has a mandate to examine institutional and market barriers to green finance.
Moving forward, the G20 should elevate the study group to become a more permanent Working Group. At this critical moment following the Paris climate change agreement, it is important to ensure alignment and harmonization of a range of domestic actions, notably around what is meant by‘ green’, some standardization of green bond screening, third-party certification system to strengthen market-confidence, as well as enhanced disclosure. At a country level, removing incentives that skewer investment decisions in the wrong direction is a first order of business. For the past decade, my organization has shone a light on the hundreds of billions of dollars that governments spend each year on subsidies for fossil fuels, a significant portion of which incentivize the oil and gas industry to extract more fossil energy from the ground. These and other perverse incentives need to go, and the public balance sheet leveraged in ways that improve riskadjusted returns for investments that benefit sustainable development. This is a unique moment, one in which for the first time the global environmental agenda is universal, ambitious and explicitly supportive of the private sector to advance solutions. Examples of innovation are springing up daily. In Kenya, smart-phones are replacing the older vision of a national banking system, and whole off-grid solar panels are leap-frogging the need for a national electricity grid. We are seeing a new generation of micro-credit systems, crowd funding and peer-to-peer lending that can scale up the development and deployment of green technologies. Our challenge is certainly not a lack of innovative, transformative ideas. It is a matter of time. Climate science makes it abundantly, urgently clear that we cannot delay action. ■
17