Climate Action 2016-2017

BUSINESS & FINANCE
GLOBALISING
GREEN FINANCE
Sir Roger Gifford, Chairman of the Green Finance Initiative, assures us that
the two-degree ceiling is being taken seriously by the financial community,
and shows how the City of London is promoting and developing the emerging
green finance sector.
In a remarkably short period of time – the
past year, especially – perceptions of
climate-related finance have shifted
profoundly. Clearly, this reorientation is by
no means complete; we are yet to reach the
trillion dollar investment target set by the
IEA. But COP21, creation of the FSB Task Force
on Climate-related Financial Disclosure, and
China and the UK’s co-convening of the G20
Green Finance Study Group each marked a
breakthrough in the sector’s development.
No longer are ‘green’ projects considered
a form of 21st century tribute, or restricted
to a corporation’s CSR programme. Instead,
the capital required to meet or even beat the
two-degree ceiling is increasingly being seen
as an investment rather than a cost – and one
split voluntarily between the private and public
sectors. Because despite growing calls for fiscal
stimulus and the state-led commitments of
the Paris Agreement, the trillions required are
far beyond the capacity of taxpayers. Even the
People’s Bank of China, custodian of the world’s
largest sovereign reserves, has admitted that
private investors must finance 85 per cent of the
country’s environmental projects.
Mobilising green capital is thus a political,
regulatory and industry priority worldwide. Such
efforts are not beginning from scratch, though.
Rather, they are seeking to further scale and
strengthen one of the financial sector’s fastest
growing and most vibrant sectors: green finance.
GREEN AND GROWING
The concept itself is simple. Green finance can
fund any means of reducing carbon emissions
or raising resource efficiency, and its adherents
range from world-renowned corporates like Apple
and Unilever to cities, states and international
development banks. And it is growing rapidly
across the full breadth of the financial and
professional services sector. Green bonds, for
example, were first issued in 2007, and sold not
because of political pressure or public subsidy but
due to rising demand for high-quality, low-carbon
assets. They have generated record-breaking
issuance volumes since, are worth in excess of
US$150 billion globally and are coveted for their
value as a hedge against carbon-related risks,
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