Read the blog post on the August Theme – Finance
The recent How Climate Change Could Trigger the Next Global Financial Crisis quotes that one-third of global assets are linked to carbon-intensive activities, such as natural resource extraction, power utilities, chemicals, construction, and industrial products companies. While Germany is actively pursuing clean energy policies, its economy is largely based on internal combustion engines of automakers Daimler and BMW, leaving it vulnerable and exposed.
“If the world is to cope with climate change, policymakers will need to pull every lever at their disposal … [It is] not simply a zero-sum game; this is a structural transformation that has many very attractive properties … The scale of the challenge requires a boldness of action for which there is no precedent.”How Climate Change Could Trigger the Next Global Financial Crisis
All governments can now create a safety net for fiscally responsible investments by embracing and supporting renewable-energy generating capacity, which has become eminently realistic in economic terms.
To hold companies and banks accountable for following through with divesting from fossil fuels, our role as citizens is to demand and call for such policy actions because they make financial sense. The 2019 State of the Green Business Report identified green finance and in particular green loans, as a form of lower cost of capital. Green bonds can be used to finance and support capital projects such as renewable energy infrastructure and/or public and alternative transportation that lower carbon emissions and increase the resilience of our communities.
The Netherlands, one of the world’s lowest-lying countries, takes climate risks and associated vulnerabilities seriously. In an effort to realize opportunities from conservation financing, The Netherlands issued one of the largest green bonds ever in the amount of $6.8 billion for low carbon development and sustainable water management, crucial in protecting it from floods and sea-level rise.
Green Bonds and loans are forms of public finance products, to serve public benefits, protect and preserve natural resources, to recognize ecosystem services and put an economic value on it, which then applies toward the transition to low-emission and low-carbon new economies.
So far, green bonds have not been used to their full potential. One example, the Seychelles First Blue Bond in November 2018, was designed to fund protection of its marine environment, and serves as a model for financing sustainability projects. Many more opportunities for bold finance options await.
What Can We Do?
- invest in and shop for efficiencies and explore your bank’s ability to issue you a green loan with lower interest.
- support green bonds for public capital projects to protect and preserve natural environments.
- support your country’s representatives that push for green policies.
- applaud bold public capital projects, follow with interest, raise questions.
- wise up, get involved, and follow the arguments, and develop positions.
- The Atlantic, How Climate Change Could Trigger the Next Global Financial Crisis, 1 Aug 2019
- GreenBiz, The 2019 State of Green Business Report, Jan 2019
- World Resources Institute, Conservation Finance Takes Off as the Netherlands Issues One of the Largest Green Bonds Ever, 21 Jun 2019
- africa.com, Seychelles Issues World’s First Blue Bond to Fund Fisheries Projects, 5 Nov 2018
- Paul Tudor Jones, Why we need to rethink capitalism, Mar 2015
- EurekAlert, Links between tax havens, deforestation and illegal fishing exposed, 13 Aug 2018
- The Peninsula Qatar, QNB’s green lending portfolio reaches QR3.3bn, 17 Feb 2019
- The Peninsula Qatar, GCC lays groundwork for green finance, 21 Feb 2019