In recent years, as the externalities of climate, environmental and ecological problems have accelerated, major economies around the world have been vigorously promoting the development of green transformation.
In the green transformation process of economies, countries and regions, as well as enterprises, green finance can play a significant role in shaping financial orientation, creating a crowding-out effect on polluting investments, promoting the integration of green industries, and promoting environmental information disclosure.
The World Bank (WB) defines green finance as environmentally beneficial investment and financing that needs to be scaled up in the pursuit of sustainable global economic development.
In recent, "green finance" has been widely mentioned in the media, and we may be able to talk about finance for a moment, but what new species is "green finance"?
Green finance refers to an innovative financial model in which the financial sector takes environmental protection and resource conservation as its objectives and, with the support of relevant policies, incorporates the potential returns, risks and costs of environmental impact as important factors in investment decisions and daily operations, thereby directing socio-economic resources towards areas that protect the environment and promote sustainable development.
Green finance contains two layers of meaning:
1.It guides the flow of capital to resource-saving technology development and eco-environmental protection industries, guiding enterprises to focus on green production and guiding consumers to form a green consumption concept.
2. The financial industry should maintain sustainable development and avoid excessive speculative behaviour that focuses on short-term interests. By combing through the timeline of green finance development, it is easy to see that green finance is receiving increasing attention in Asia.
Green finance products are classified by product form, including green financing products, green investment and trading products, environmental risk management products and environmental information products. Green financing products include green credit, green bonds, etc.
In addition to green finance, there is also climate finance. Climate finance is also commonly referred to as climate investment and finance. The World Bank Group (WBG) defines climate finance as the provision of investment financing for low-carbon, climate-resilient development projects.
The United Nations Environment Programme (UNEP) defines climate finance as an investment linked to the United Nations Framework Convention on Climate Change (UNFCCC) that reduces emissions while allowing countries to adapt to climate change and mitigate the impacts of climate change.
Climate finance is defined by the United Nations Framework Convention on Climate Change (UNFCC) as local, national or transnational financing (from public, private and other sources of finance) designed to support mitigation and adaptation actions to address climate change.
The Kyoto Protocol and the Paris Agreement call on Parties with greater financial resources to provide financial assistance to those with fewer and more vulnerable resources. Climate finance begins by acknowledging that there are significant differences between countries in terms of their ability to prevent and respond to climate change and the extent to which they contribute.
Climate finance is needed to mitigate climate degradation, as large-scale investment and financing is required to significantly reduce greenhouse gas emissions. Climate finance is also important for climate change adaptation, as significant financial resources are needed to adapt and reduce adverse impacts.
