Page 21 - Green Finance 2024

evident in the rise of green bonds and sustainability-linked financial products, which

signal to companies across sectors that sustainability is valued by investors, leading to a

broader adoption of environmentally friendly practices (Zerbib, 2019). Additionally, the
influence of green finance on corporate governance is profound. Investments focusing

on environmental, social, and governance (ESG) criteria have become a powerful tool

for investors to exert pressure on companies to improve their environmental

performance. This form of indirect impact is significant, as it can lead to substantial

changes in corporate strategies, operational methods, and long-term sustainability goals
(Scholtens, 2006).

Green finance also plays a critical role in fostering innovation, especially in green

technology. The availability of funds through green investment vehicles, such as green
venture capital and private equity, has been instrumental in driving advancements in

sustainable technologies and practices. These investments support the development and

commercialization of renewable energy technologies, energy-efficient solutions, and

other innovations essential for environmental sustainability (Boubaker et al., 2018).

Furthermore, green finance has a pivotal role in promoting sustainable practices in
sectors like agriculture and urban development. Investments in sustainable agriculture

contribute to the adoption of practices that are environmentally sustainable, resource-

efficient, and conducive to biodiversity conservation, thereby indirectly impacting the

broader environmental landscape. In urban development, green finance supports the

transition to sustainable cities through investments in green infrastructure, public

transportation, and energy-efficient buildings, which indirectly contribute to reducing
urban carbon footprints and enhancing the resilience of urban areas to environmental

challenges (Ezroj, 2020).

An important indirect impact of green finance is its role in setting and promoting
standards and benchmarks for sustainability. The development of green finance markets

has led to the creation of standards and certifications that define what constitutes a green

investment. These standards, while directly impacting specific investments, have a

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