Page 9 - Green Finance 2024

The last decade has seen a rapid expansion and diversification of green finance. The

Paris Agreement in 2015 gave a new impetus to climate finance, as countries committed

to mobilizing finance flows consistent with a pathway towards low greenhouse gas
emissions and climate-resilient development. For example, green bonds continued to

grow in popularity, with global green bond issuances reaching new highs each year.

Alongside traditional green bonds, new financial instruments like green loans and

sustainability-linked bonds have emerged. These instruments tie the financial terms of

the bond or loan to the achievement of specific sustainability targets.

In the academic world, research has become more nuanced and interdisciplinary.

Previous studies like D. Zhang, Mohsin, and Taghizadeh-Hesary (2022) shows that

“Overall, the findings show that green finance negatively influences carbon emissions in
the G-20 countries” and this can be achieved by “the stability and continuity of green

finance” and the development of green finance across the entire industrial chain.

Specifically, the policies that need to be coordinated and implemented include: (1)

creating the emissions trading scheme by continuing to include carbon emission permits

in pledged mortgages to provide a greater guarantee rate within the threat range; (2) A
bond rating system and green security tailored to each nations’ unique circumstances

should be implemented; (3) Increasing the green credit provision for renewable energy

projects introduces new measures, such as low-interest loans, easing financing

approvals, and shortening the approval cycle; (4) The functions of the securities market

must be clarified; and (5) Relaxing the application of green finance in the carbon market.

Despite its growth, green finance faces several challenges. One key issue is the lack of

standardized definitions and metrics for what constitutes “green” or “sustainable”

investment, leading to concerns about “greenwashing” - where investments are labeled

as green without making substantial environmental contributions. Efforts like the EU
Taxonomy for Sustainable Activities aim to address this by providing a classification

system for environmentally sustainable economic activities.

8