Participants discussed the potential of green finance at an inaugural event organized by the Global Green Financial Leadership Program.
Case studies demonstrated that holistic approaches that consider the SDGs can enhance the ability of investors to manage environmental and social risks and provide them with a competitive advantage.
26 May 2018: Participants highlighted the urgency of green finance to tackle climate change and pollution, and discussed opportunities for establishing national roadmaps for green financial systems, at the first meeting of the Global Green Financial Leadership Program (GFLP). The Program aims to serve as a platform for capacity building and knowledge sharing on green and sustainable finance.
Tsinghua University’s Centre for Finance and Development, in collaboration with the Sustainable Banking Network (SBN) and China Council for International Cooperation on Environment and Development (CCICED), launched the GLFP to share best practices and innovation for scaling up green and sustainable finance in line with the Paris Agreement on climate change, the SDGs and the Group of 20 (G20) Green Finance Study Group. Over 130 policy makers, financial regulators and practitioners from 35 countries in Africa, Asia and Latin America and experts from more than 50 international organizations and commercial entities attended the GFLP’s inaugural event, which took place in Beijing, Huzhou and Shanghai, China, from 21-26 May 2018. GFLP attendees participated in site visits to observe green finance projects, including a roof solar project supported by solar loans.
Keynote speakers underscored the urgency of using green finance as a mechanism to address climate change and pollution. Several speakers suggested that innovative financial schemes and instruments could help to “green” the financial system, and shared their experiences with developing green financial systems. Others described how conducting environmental risk analysis can enhance firms’ ability to manage environmental risks and encourage them to green their portfolios, such as by rising ratios for loans to polluting sectors, like the coal-fired power sector, based on assumptions of carbon price increases and strengthened environmental regulations.
China, India, Indonesia, Singapore and South Africa are starting to require companies to disclose ESG investment.
APG, Blackrock, Hermes and Hwabao presented case studies on environmental, social and governance (ESG) investing, observing that many countries, including China, India, Indonesia, Singapore and South Africa, are starting to require companies to disclose ESG investment. These groups further underscored the benefits of incorporating the SDGs into investment decisions, stressing that considering the SDGs can provide investors with a competitive advantage on long-term investment returns. Speakers also identified linkages between green bonds and progress on the SDGs, particularly SDG 6 (clean water and sanitation), SDG 7 (affordable and clean energy) and SDG 11 (sustainable cities and communities).
Participants shared their experiences in establishing national roadmaps for green financial systems. Challenges identified by participants included regulatory policies and a lack of awareness on green financial systems, definition of such systems, capacity building and data collection. Ma Jun, Chairman of China’s Green Finance Committee, stressed the importance of high-level support for green finance, describing how senior government leaders in China have sent strong policy signals to regulators and market participants on the importance of green finance for China’s economies. Participants identified policy coordination among ministries, as well as information disclosure, as critical for success.
The inaugural GFLP event resulted in agreement to establish nine working groups to continue to promote knowledge sharing and capacity building to scale up green finance. The groups will focus on green taxonomy, green incentives, financial green small and medium-sized enterprises (SMEs), financing green agriculture and green fintech applications, among other topics.
Also on promoting knowledge sharing around green finance, nine companies in Singapore are sharing sustainability best practices through a ‘Circle of Practice.’ The circle brings together Olam, CapitaLand, DBS, SATS, Jadestone Energy, Japfa, Sysmex Asia Pacific, Wipro Consumer Care and the Norbreeze Group to discuss opportunities for re-imagining sustainable business and driving change at scale. The Singapore Circle of Practice is open to chief financial officers and finance teams from firms in Singapore, and will meet quarterly to discuss sustainability trends and share experiences and progress in developing tools for sustainable business decision-making and green finance. [GFLP Website] [GFLP Press Release] [Eco-Business Press Release on Singapore Circle of Practice]