Green finance world hubs

Examples of the currently most prominent hubs for Green Finance include the United Kingdom (UK) and China.

 

The United Kingdom has been called by United Nations Environment Programme as the global hub for green finance. The UK also hosts the world’s first Green Investment Bank (GIB), which was created by the UK Government as the sole shareholder. The Government has provided the GIB with initial capital to invest, and this is used to back green projects, on commercial terms, across the UK and mobilise other private sector capital into the UK’s green economy.

 

According to a recent UNEP report The United Kingdom: Global Hub, Local Dynamics (2016), there are currently six priority areas for sustainable finance in the UK:

 

1. Social innovation: aligning finance with individual values and social purpose — for example, from leading work on ‘unburnable’ carbon and stranded assets to new thinking about the overall purpose of the financial system.

 

2. Institutional stewardship: placing sustainability factors at the heart of mainstream financial sectors, most notably investment management — for example, the Law Commission’s review of fiduciary duty.

 

3. Capital market mobilization: incorporating sustainability into equity and debt market disclosure, analysis and capital raising — for example, mandatory reporting of greenhouse gases on the London Stock Exchange. Green bonds are also a critical growth area: the UK was the third largest green bond market in 2015.

 

4. Housing finance: improving the environmental and energy performance of the UK’s housing stock through new ways to mobilize financing — for example, finding a practical successor to the Green Deal mechanism.

 

5. Prudential governance: embedding sustainability into the safety and soundness of key sectors and the system as a whole — for example, the Bank of England’s review of insurance and climate change.

 

6. Public balance sheet: mobilizing fiscal and other resources to facilitate the transition to a low-carbon, green economy — for example, the launch of the world’s first Green Investment Bank.

 

 

China has been actively setting up a Green Financial System in recent years, and is the current leader in Asia in the green finance field. The collection of reports by the People’s Bank of China and UNEP (2015), called Establishing China’s Green Financial System, creates a comprehensive set of background documents and recommendations for China to develop and implement its green financial system. The following green finance topics are described in their own background reports:

 

1. Green Banking System

2. Green Funds

3. Green the Development Banks

4. Discounted Green Loans

5. Green Bonds

6. Green IPO

7. Emissions Trading

8. Green rating

9. Stock index

10. Environmental Cost Analysis

11. Green Investor Networks

12. Compulsory Green Insurance

13. Lender liability

14. Mandatory Disclosure