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Greening Our Future with “Green Finance”
By admin September 30, 2016

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During the recent G20 Summit held in Hangzhou, the importance of scaling up green finance has been recognized, aimed at support environmentally sustainable growth globally. “Green finance,” as defined in the summary of G20 Green Finance Synthesis Report, refers to financing of investments that provide environmental benefits in environmentally sustainable development. It plays a critical role in the transition to a sustainable, low-carbon economy. Reductions in air, water and land pollution, reductions in greenhouse gas emissions and improvements in energy efficiency are examples of such benefits. It is estimated that over the next 15 years roughly USD $90 trillion of public and private capital shall be mobilized to pursue the world’s major sustainable development goals. And as a fundamental tool to support sustainable development, green financing, especially financing from private capital, has become more dynamic and diverse along the path.

Green bonds, a key component of investment vehicles to raise private capital, were created to fund projects with positive environmental and climate benefits. According to a China-focused Green Bond Report, an annual investment of at least USD $320-640 billion will be required to address environmental issues and climate change for China alone. Globally, the market of green bond has grown rapidly with USD $41.8 billion in 2015, almost four times the 2013 issuance of USD $11 billion. Some other financial solutions, mentioned by Mr. Henry M. Paulson – chairman of the Paulson Institute and a former U.S. Secretary of the Treasury – in a recent NY Times article, include private firms funding for private wind parks financing in Mexico and India, and multinational trust funds financial support for solar plants in India, South Africa and Morocco.

A most recent move in the development of global green finance is the launch of Luxemburg Green Exchange (LGX) on September 27, 2016. Aimed at setting “a new benchmark for the rapidly evolving green securities market,” the Luxemburg Stock Exchange (LuxSE) just launched the world’s first platform for green financial instruments. The LGX limits access to issuers who comply with strict environmental criteria and entirely dedicate their funding to green investments, proclaiming this particular market’s enormous potential to investors from all over the world, meanwhile demonstrating the financial sector’s proactive engagement in sustainable development.

For more information:

G20 Green Finance Synthesis Report

Roadmap for China: green bond guidelines for the next stage of market growth

How to Raise Trillions for Green Investments

Financing Sustainable Development: Moving from Momentum to Transformation in a Time of Turmoil

Luxembourg Stock Exchange launches ‘world’s first’ green finance platform

 


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