On October 12, the Paulson Institute and partners—the UN Environment Inquiry, the Institute of International Finance (IIF), the Securities Industry and Financial Markets Association (SIFMA), the European Banking Federation (EBF), and Bloomberg Philanthropies—co-hosted the fourth meeting of the Greening the Financial System series in Washington DC. This meeting recognized the rapid progress of green finance over recent years and focused on the opportunities regarding green finance as it continues to evolve with a particular emphasis on digital finance and China.
Speakers and participants at the meeting drove home three major points:
- The time for green finance is now. Global green bond issuance continues to grow and the development of green products including green ABS and carbon futures are in the works. One estimate predicts that green bond issuance have risen by 50% year on year in first 3 quarters of 2017. These numbers will only see increases as financial institutions and governments are able to harness the explosive power of financial digital technology.
- Implementation is key. Governments and related entities should collaborate to ensure a successful green financial ecosystem with the right architecture, regulatory framework, and policies to encourage sustainable development and promote economic incentives. The Task Force on Climate-related Financial Disclosures (TCFD), credit rating agencies and governments across the globe are all in the process of moving from recommendations and guidelines to actionable measures and robust engagement.
- China is a green finance powerhouse. The start of the current green finance movement is generally attributable to China’s elevation of the subject to the G20 agenda in 2016 and China has not slowed down. Plans to launch a nation-wide carbon market and integrate green goals with its Belt and Road Initiative are demonstrative of China’s comprehensive and ongoing engagement with green finance that will eventually dictate global standards.
Since green finance sprung onto the scene in 2016, much has clearly changed—both globally and in China. The future of the green finance movement is bright as China makes strides toward capacity building and innovation and as the financial world moves towards a new world order centered on digital technology.
The Paulson Institute, along with our partners, are proud to be leading the charge in green finance, and will be releasing a forthcoming policy paper to further the discussions from this meeting of Greening the Financial System.
