Inter-American Development Bank
facebook
twitter
youtube
linkedin
instagram
Abierto al públicoBeyond BordersCaribbean Development TrendsCiudades SosteniblesEnergía para el FuturoEnfoque EducaciónFactor TrabajoGente SaludableGestión fiscalGobernarteIdeas MatterIdeas que CuentanIdeaçãoImpactoIndustrias CreativasLa Maleta AbiertaMoviliblogMás Allá de las FronterasNegocios SosteniblesPrimeros PasosPuntos sobre la iSeguridad CiudadanaSostenibilidadVolvamos a la fuente¿Y si hablamos de igualdad?Home
Citizen Security and Justice Creative Industries Development Effectiveness Early Childhood Development Education Energy Envirnment. Climate Change and Safeguards Fiscal policy and management Gender and Diversity Health Labor and pensions Open Knowledge Public management Science, Technology and Innovation  Trade and Regional Integration Urban Development and Housing Water and Sanitation
  • Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Sostenibilidad

Just another web-blogs Sites site

  • HOME
  • CATEGORIES
    • Agriculture and Food Security
    • Climate change
    • Ecosystems and Biodiversity
    • Environmental and Social Safeguards
    • Infrastructure and Sustainable Landscapes
    • Institutionality
    • Responsible Production and Consumption
  • Authors
  • English
    • Español

Green Finance: The Key to Unlocking Sustainable Development

July 18, 2017 por Autor invitado 1 Comment


COPYRIGHT © (jacinta lluch valero) by (CC BY-SA 2.0) – Flickr

 

 

The world has, for some time now, been keenly aware of the challenges that poor environmental management poses to our common future – threatening human health, peaceful societies, and long-term economic sustainability.

2016 was the hottest year on record due to man-made climate change. Smog has increasingly blighted many cities and an estimated 18,000 people die every day from air pollution. Some estimates say erosion and pollution have claimed a third of the world’s arable land over the past 40 years, while demand for food soars as populations grow. And these are just some of the various distressing statistics around the topic.

The good news is that the Paris Agreement on Climate Change, the 2030 Agenda for Sustainable Development and many other international processes show we are now tackling these issues head on. However, for these processes —and many other actions at city, regional and national level— to work, we need to fund them.

According to a recent report from the OECD, commissioned by the German government, we need to invest $6.9 trillion in infrastructure every year between now and 2030 to hit the 2°C global warming target agreed to in Paris. In Latin America alone, climate investment needs have been estimated at $75-80 billion per year, almost three times its current volume of such investment.

This is the gap that green finance, a growing global movement, can fill. Broadly speaking, green finance includes the financing of environmentally friendly investments, as well as practices that embed sustainability more broadly across the industry. The G7 recognized that this financing is “fundamental” to achieving environmental and climate goals. Encouragingly, we are seeing huge progress across all fronts.

More measures related to green finance have been introduced since June 2016 compared to any other one-year period since 2000. As a result, green finance flows have increased, most notably in the issuance of green bonds, which grew by around 100% to US$81 billion in 2016.  A comprehensive review looking beyond green finance to assess sustainable finance more broadly indicates that global sustainable investment assets under management have increased by 25% since 2014.

The actions that have brought us here are too numerous to list, but country examples include Brazil, where the Central Bank issued guidelines on integrated risk management including environmental risk in March 2017. In the US, the California State Insurance Commissioner launched the Climate Risk Carbon Initiative online database in January 2017 to provide information on high-carbon investments of large insurance companies.

A rapid expansion in partnerships related to green finance has also been evident across banking, insurance and investment. For example, the Principles for Responsible Investment (PRI) has added over 185 members from 30 countries since June 2016, and now represents over 50% of global assets under management.

The UN Environment Inquiry into the Design of a Sustainable Financial System’s Green Finance Progress Report, a just-released contribution to the G20’s Green Finance Study Group, uncovered dozens of encouraging policies and financial product developments.

Meanwhile, the Inter-American Development Bank has set a goal to increase financing for climate change to 30% of approvals by 2020. This will be achieved through a combination of innovative instruments such as green bonds, as well as traditional financial products including loans, grants, guarantees and equity investments.

These steps are hugely encouraging. Now, with global carbon emissions stalling and clean tech costs plummeting, the task ahead is to step up the pace. Below, some practical steps stand out to shift the trillions of private capital required:

  1. Roll out sustainable finance roadmaps at the national level, which is happening in countries from Argentina to Italy.
  2. Target public effort where market forces cannot reach —for example by using temporary and targeted incentives (such as feed-in tariffs) to overcome investor concerns about new sectors and themes, such as energy efficiency and climate adaptation.
  3. Encourage a real convergence at the international level in terms of the “rules of the game” that shape financial markets, such as market standards and financial regulations.

The financial system is reshaping itself to align with the sustainable development imperatives of the 21st century. But we all need to nudge it along.

____________________

UNEP Inquiry: Design of a Sustainable Financial System is a leading international platform for advancing national and international efforts to shift the trillions required for delivering an inclusive, green economy through the transformation of the global financial system.


Filed Under: Climate change

Reader Interactions

Comments

  1. Financesage says

    June 25, 2024 at 10:38 am

    The article underscores the crucial role of green finance in sustainable development. It’s inspiring to see the rise in green bonds and sustainable investments. Continued global efforts and targeted incentives are essential to bridge the funding gap and meet climate goals. Great insights and a timely call to action!

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Follow Us

Subscribe

SEARCH

Sustainability

This blog is a space to reflect about the challenges, opportunities and the progress made by Latin American and Caribbean countries on the path towards the region’s sustainable development.

SIMILAR POSTS

  • Is there a historic trend towards sustainable infrastructure?
  • US$102.5 trillion: the figure we need to invest by 2030 to ensure sustainable economic growth
  • Sovereign Green Bonds: 4 reasons to pay attention in LAC
  • Collaboration and Partnerships for Climate Finance
  • How can sustainable infrastructure attract new investments and increase the resilience of projects and assets in the face of climate change

Footer

Banco Interamericano de Desarrollo
facebook
twitter
youtube
youtube
youtube

    Blog posts written by Bank employees:

    Copyright © Inter-American Development Bank ("IDB"). This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives. (CC-IGO 3.0 BY-NC-ND) license and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC- IGO license. Note that link provided above includes additional terms and conditions of the license.


    For blogs written by external parties:

    For questions concerning copyright for authors that are not IADB employees please complete the contact form for this blog.

    The opinions expressed in this blog are those of the authors and do not necessarily reflect the views of the IDB, its Board of Directors, or the countries they represent.

    Attribution: in addition to giving attribution to the respective author and copyright owner, as appropriate, we would appreciate if you could include a link that remits back the IDB Blogs website.



    Privacy Policy

    Derechos de autor © 2025 · Magazine Pro en Genesis Framework · WordPress · Log in

    Banco Interamericano de Desarrollo

    Aviso Legal

    Las opiniones expresadas en estos blogs son las de los autores y no necesariamente reflejan las opiniones del Banco Interamericano de Desarrollo, sus directivas, la Asamblea de Gobernadores o sus países miembros.

    facebook
    twitter
    youtube
    This site uses cookies to optimize functionality and give you the best possible experience. If you continue to navigate this website beyond this page, cookies will be placed on your browser.
    To learn more about cookies, click here
    x
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
    Non-necessary
    Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
    SAVE & ACCEPT