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Put simply, green finance is any financial activity that supports a positive environmental outcome towards a sustainable future. That might be putting funding towards initiatives that lower carbon footprints or investments that offset emissions, for example.
There’s an extensive list of real-world green finance examples, but to keep things simple, here’s a few of the most commonly recognised:
This includes investments in things such as wind or solar power, hydroelectric projects, and other sources of sustainable energy creation.
Reducing gas emissions is something we hear in the media frequently, which is why we often hear of new carbon offset programs being launched. For example, there’s +40 airlines worldwide offering voluntary offset schemes where passengers can contribute a portion of their ticket purchase to offset the CO2 emissions from their travel.
These are companies created with the intent to innovate technologies focused on solving some of the bigger issues associated with climate change or environmental issues.
The CRF reports more than 25% of the human population worldwide lacking access to clean water, there’s plenty of projects focused on efficient water use and consumption.
This includes any access to funding be it loans or investments focused on sustainability and energy efficiency. Similarly, this can include green bonds.
There are several different potential stakeholders behind green finance projects. Looking into 2030, environmental sustainability is high on most government and industry agendas. In fact, the UN Environment Programme has been working with countries on a global scale to map out ambitious but achievable Sustainable Development Goals.
So, who are the investors behind green finance?
The United Nations (UN) is a great example of an international organisation supporting green finance initiatives at an international and global level.
No surprise here, you can find several governments worldwide implementing policies and incentives to bring green finance activities forward. This could include implementing new environmental standards, such as Australia’s Green Bond Program, which enables investors to back public projects that drive Australia’s net zero transformation.
At the corporate level, businesses can contribute to green finance through the investment in environmental projects or new eco-friendly standards. As an example, this could be when a company carefully maps out their suppliers or partners based on environmental, social and governance (ESG) criteria (i.e. green technologies or renewable energy sources).
These play a larger role in supporting green finance activities, as banks and investment firms can offer loans and products specifically based on supporting green initiatives. For example, Commonwealth Bank of Australia (CBA) invests heavily in green finance through sustainable finance commitments, green bonds, and renewable energy financing.
Universities and other research institutions invest heavily in studies focused on environmental projects. Research and key findings can often be published and used to support a wide array of green finance projects, including the innovation of new environmental products and/or services.
There are organisations specifically focused on supporting and advocating for a sustainable future through better environmental practices – for example, the Climate Council, which is a non-profit focused on advising and advocating to the public on climate change initiatives.
Last but not least, individuals who invest in projects, initiatives and innovations focused on minimising environmental impact or investing where projects are 100% socially and environmentally responsible.
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