« One of the enemies that we’ll be fighting at this conference is cynicism, the notion we can’t do
anything about climate change[1]. » President Barack Obama’s statement at the United Nations Climate Change Conference in Paris on December 1, 2015.
Climate change has emerged as the foremost political, social and economic issue in this contemporary world .Globaly, all economic actors are beginning to take action, with a strong emphasis on decarbonization strategies. Passaging to a low-carbon or green economy will demand a huge capital investment, especially through green financing, to support initiatives that decrease greenhouse gas emissions and help businesses adapt to the harmful repercussions of climate change. This highlights the critical need to understand green finance and its importance.
Green finance refers to financial activities and investments aimed at supporting environmentally sustainable development and transitioning to a low-carbon economy. It includes a wide variety of financial instruments and services, such as green bonds, sustainable banking practices, and climate funds. Green bonds are specifically allocated for climate and environmental projects, allowing investors to support eco-friendly initiatives while earning returns.
The Europeen Green Deal is aiming to achieve cimate neutrality by 2050, but this goal requires a great financial undertaking. To reach this green metamorphosis of the European economy, significant investments are needed across multiple sectors. The EU estimates that approximately €350 billion of additional investment is required in the energy system alone each year up to 2030 in order to meet the 55% emission reduction target (European Commission, 2021).
A central component of the European Green Deal is a revamped sustainable finance strategy aimed at funding sustainable growth and directing private investments towards projects that facilitate the transition to a climate-neutral economy. The goal of this policy is to ensure that the private sector considers sustainability-related non-financial factors when making financing and investment decisions.
Nowadays, the integration of ESG criteria into investment decisions is essential. This proposition form an opinion of the overall outcome of firms on envirenmental, social, and economic sustainability. Investors are increasingly acknowledging that robust ESG practices contribute to the long-term success of companies. By integrating these criteria, investors aim to better assess risks and opportunities, thus fostering long-term value creation.
Overall, Green Finance contributes to the transition to a low-carbon economy by addressing financial resources towards projects that lessen greenhouse gas emissions and enhance energy efficiency. Aligning financial practices with environmental goals not only reduces the negative impacts of climate change but also drives innovation and strengthens resilience in businesses and communities. In the end, the integration of green finance with sustainable development guarantees that economic growth is both inclusive and environmentally conscious, laying the foundation for a more sustainable and equitable future.
Sources :
[1]: https://obamawhitehouse.archives.gov/the-press-office/2015/11/30/remarks-president-obama-first-session-cop21
Ingénieure en Énergétique et Énergies Renouvelables avec double facette technique et réglementaire en énergie