Why developing nations are the unlikely leaders of green finance

It is completely inconceivable that public finance will play a major role in transitioning to sustainable development. The answer has to be private money”. These words pronounced by Simon Zadek, co-director of United Nations Environment Program (UNEP) Inquiry into the Design of a Sustainable Financial System, during an event in Singapore in early 2017, express the urgent need for private investment to achieve global sustainability.

germany-2064517_1920Indeed, despite new records in 2016, there is still a lack of investment in green finance, to ensure the world has a sustainable future. Green finance consists in investments that contribute towards a sustainable, low carbon and climate-resilient economy. In other words, it is the key to reduce our carbon emissions, and achieve the United Nations 2030 Agenda for Sustainable Development.

However, a closer look at the world investment trends, illustrates a very paradoxical situation. According to Simon Zadek, innovation in green finance is not driven by nations where the major capitals are located, but by developing nations such as Mongolia, Kenya, or Colombia. “When you look at the amount of innovation taking place there, especially in the financial technology space, you realize there’s a lot of opportunity for the developed world to learn from the developing world” stated Nuru Mugambi, director of communications and public affairs at the Kenya Bankers Association. In her country, the implementation of mobile phone-based funds transfer as a tool for entrepreneurs to access micro-finance, is now a daily way of life. For Erik Solheim, UNEP Executive Director, innovative initiatives in developing economies demonstrate how private finance can adapt to meet the challenges of financing sustainable options.

pudong-1798289_1920Leading global green finance investments, China paves the way to promote sustainable development of the economy. The new 35-point program, of the Chinese government “will improve the function of the capital market in allocating resources and servicing the real economy, and support the development of an ecological civilization”, the People’s Bank of China reported.

Nevertheless, only a global commitment will allow us to raise enough funds to address the 2030 Sustainable Development Goals. Considering that we need more than twice the current stock of global capital to achieve the 2030 Agenda, there is nothing more important than scaling up private investments, while using the international community as a catalyzer. “It is very hard for the financial system to operate in and of itself, independent of international and national agendas” has stressed Piyush Gupta, CEO of an Indian Bank. Hence the need for a global mobilization of all stakeholders, banks, government and enterprises to work efficiently towards sustainable options. Financing sustainable development is now a vital challenge, as we need to get as close as possible to the 2 Celsius degrees’ temperature rise if we want to ensure a future for the next generation.

For further information, please, visit: http://www.eco-business.com/news/why-developing-nations-are-the-unlikely-leaders-of-green-finance/

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