What is Green Finance?

Simply put, green finance is a loan or investment that promotes environmentally positive activities, such as the purchase of environmentally friendly goods and services or the construction of green infrastructure. Green finance expands access to environmentally friendly goods and services for individuals and businesses, enabling the transition to a low-carbon society and more socially inclusive growth. This results in a "big green multiplier" effect, where both the economy and the environment benefit, making it a win-win situation for everyone.

What are the Green Financing Types?

• Green Mortgages
A green mortgage is a way for banks to reward those who buy energy-efficient homes or make energy-efficiency improvements to their existing homes.

Green Loans
These are loans used to support environmental initiatives such as home solar panels, electric cars, energy efficiency projects, and more.

Green Banks
Green banks operate similarly to traditional banks but use public funds to encourage private investment in renewable energy and other environmentally friendly initiatives. According to a 2020 study, the number of green banks in the US jumped to 20 between 2011 and 2020, investing $7 billion in renewable energy.

• Green Bonds
Green bonds make up the bulk of green finance. These include bond investments used to support various green initiatives such as renewable energy, clean transportation, and conservation, among others.

Global surface temperatures are likely to rise under all scenarios by more than 1.5°C above pre-industrial levels by 2040 and by more than 2°C later in the century without dramatic and sustainable reductions in greenhouse gas emissions. This underpins the urgency and importance of aligning finance with the objectives of the Paris Agreement, and sustainability in general.