Green Finance is Key to Transitioning to a Low-Carbon Economy

Invest with Impact to Achieve Net-Zero

Photo by Towfiqu barbhuiya on Unsplash

“It’s time to stop burning our planet, and start investing in the abundant renewable energy all around us.”

Antonio Guterres, UN Secretary-General

What is Green Finance

If we want to keep as much of our beautiful planet as we can, then we need to turbocharge ‘green’ finance. The financing of innovative technical solutions that will help us transition to a lower carbon economy is a crucial element in humanity’s fight against climate change. Investing in innovative technology is not the only benefit green finance can earn, funding activities that support incremental improvements on existing technologies such as solar or wind will support reducing emissions. The below sentence is a more succinct description of what green finance is.

“Simply, green financing is a loan or investment that supports environmentally-friendly activity, such as purchasing environmentally-friendly goods and services or building environmentally-friendly infrastructure.”

Sarah Wire, Senior Sustainability Manager, Lloyds Banking Group

An environmentally friendly investment can also be coined as sustainable investing or impact investing. A good example of one is green bonds. According to the WEF, Green bonds were first issued in 2007, to assist with investment in climate change solutions. By 2018, $521bn had been issued in green bonds since their inception. In 2021 alone, data shared by Statista informs us that $509bn were issued in green bonds. These statistics give a clear indication of the trajectory that green bonds are currently enjoying.

Examples of how Green Finance helps us Reduce Emissions

‘Green’ finance is supporting the reduction of millions of global emissions each year. An obvious example of the support green finance brings is an installation of an on-shore wind farm. One wind turbine once constructed provides on average 2.5–3 Megawatts, according to the UKs National Grid. All the investments in the UK’s on-shore and off-shore wind farms ensured that…