Green Finance: Across the Universe

Abstract

To support the global economy’s transition to sustainability, we need to develop an alternative to traditional financing — “green finance”. Green finance includes a number of financial asset classes and institutions, both public and private, the foremost of which are green banking, green debt markets, and green structured funds. The main actors driving the greening of the financial system are institutional investors, international financial institutions (IFIs), regulatory authorities, and central banks. However, the amount of green finance is limited because of a number of challenges, both microeconomic and macroeconomic. These challenges should be addressed by designing an enabling environment that facilitates green finance. Greenwashing can only be prevented by means of a transparent definition of green financing. Voluntary principles and guidelines for green finance should be established and monitored for all asset classes: bank credits, bonds, and secured assets for institutional investors. These measures should be supported by all financial system actors.