Green Finance

ESG Consultants can help you to define opportunities in Green Finance

Green Finance, also called Climate Finance, can be defined as a set of financial mechanisms and instruments that consider the potential environmental impact of investment and financial decision-making, while aiming to promote environmental and social sustainable development. Green Finance investment and funding decisions are based on environmental screening and risk assessment, in order to ensure that established environmental sustainability standards are met.

Green Finance in the banking sector means that financial institutions consider the potential environmental impact of their actions, actively identify environmental risks and opportunities, design corresponding innovative financial products, and provide funding platforms and corresponding financial instruments to coordinate economic development and environmental protection. Green banking drives the capital flow and directs them to the industrial sectors dominating green economy.

Non-bank financial bodies may also include a wide range of green financial instruments such as green bonds, trusts, shares, insurance products, venture capital, mutual funds, etc. These instruments guide social and economic resources to projects that support the development of environmental protection, energy efficiency and circular economy, among others.

For financial institutions, Green Finance requires an examination of the project’s environmental impact and energy efficiency throughout the investment decision-making process, and the incorporation of potential gains and costs into the pricing of products and services. Green Finance encourages companies to internalise environmental costs into their financial statements and eventually, through emissions reduction and efficiency improvements in energy consumption, to minimise environmental damage and maximise impact while improving economic results, so as to optimise the course towards a low carbon economy.