Seeing green

1 September 2016 By Katrina Hamlin Follow @KatrinaHamlin

Green finance is high on the agenda at the G20. Policymakers see it as a way to fund much-needed infrastructure. Investors are also starting to pay more attention to environmental issues. Though big challenges remain, the top-down effort gives green finance a fighting chance.

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Global leaders will gather for the G20 summit in Hangzhou on Sept. 4 and 5.

Measures to finance green initiatives, known as “green finance”, will form a major part of this year’s summit, Bank of England Governor Mark Carney said in a speech in July.

As much as $7 trillion will need to be invested around the world over the next 15 to 20 years to fund “clean energy or lower-carbon energy infrastructure and cleaner water sanitation, etc”, Carney said at an event in Toronto.

On Aug. 31, China’s central bank and six other government agencies issued “Guidelines for establishing the green financial system”. The plan aims to direct private capital towards environmentally sustainable investments, whilst restricting investment into polluting sectors.

Investors are increasingly interested in Environmental, Social and Governance (ESG) issues, according to the G20 Green Finance Synthesis Report published in July 2016. The report argues that investors see ESG factors as a driver of investment performance, and outlines the challenges to scaling up the asset class.

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