Green Finance - Climate Change is everyone's business

“As the Climate Crisis deepens, the financial sector will play a key role.”

Without the financial sector's support, it will become increasingly difficult to bring the required awareness to environmental issues globally. Money talks and money propels action.

Investment is crucial to projects and businesses who are supporting and practising environmentally sustainable strategies and researching innovative energy solutions. What Is Sustainable Finance and Why Is It Important?

But what is Green Finance?

In layman’s terms and according to the World Economic Forum - it is any “structured financial activity that’s been created to ensure a better environmental outcome”.

Greater accountability is needed and this is where we see Green Finance playing a huge part.

There has been a significant increase in the availability of green finance to businesses to help make them greener but more importantly, the investment sector, both public and private, are now also demanding for businesses to have ESG strategies in order to invest in them.​

Investors are now asking themselves the fundamental question;

Why should I invest my limited assets today to support your business growth tomorrow?

Without ESG strategies, the answer is you shouldn't.

What is ESG?

If you want to check how sustainable a company is, you will need to look for its ESG report. ESG has become a hot topic in the boardrooms, and an increasing requirement for investors, employees and customers. As a business, If ESG regulations don’t affect you yet, they will soon. 

Read more about ESG in our 2022 blog!

Change, as with anything, is slow and frustrating. Historically however, it has been proven that enterprise and business are far more capable of decisive action than the majority of governments. Therefore highlighting the financial world’s important role in that they can have a faster and more effective impact on the current climate crisis and sustainability being practised on a larger scale.

“Banks are driven to take action on climate change not only because of regulation. As climate risk becomes more evident and starts impacting the bottomline of businesses, banking players have a commercial opportunity - to finance the green agenda and maintain a leadership position, which is defined by customer growth, employee loyalty and overall revenue improvements." Lubomila Jordanova ​

From my research - in terms of ESG, sustainable finance appears to be encompassing this new business strategy because it defines the investment decisions that are now taking into account the environmental, social and governance of an economic activity or project.

“The investment giant Blackrock proposes reaching its plea of “net-zero” by 2050, which implies a drastic reduction in greenhouse gas emissions. That a leading global investment manager is pursuing such an ambitious goal is significant. The world has to pause for a second, take a deep breath, and think about how to cater options given the more than $9 trillion in assets that Blackrock manages. This might be just the beginning of the unprecedented opportunity for sustainable finance. It may even be just the push that global economies need to truly align with the Paris Agreement. “ Dr. Carlos Vargas, Lecturer of Sustainable Finance and Investments; and Environmental Economics

Investors and customers want transparency and that should be the sole focus of applying ESG strategies to your business.

Speaking of transparency, in November 2022 the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD) which is seen as a major step towards the establishment of a new sustainability reporting system in Europe.

Although ESG has recently received huge backlash due in part to the war in Ukraine and rise of populism, there is no question that when applied transparently and with true sustainability in mind, ESG is a positive thing.

“The disruption caused to energy markets by Russia's invasion of Ukraine is forcing banks and governments to speed up the movement of capital to lower carbon sources.

This shift in capital and investment may be uncomfortable in the near term, especially as populations struggle with the cost of living, but the backdrop for these sorts of decisions has put an indirect price on carbon – something fundamentally important that the world has not yet been able to officially agree on.”

Those who are forward thinking and progressive are already seeing the increase of assets and getting on the bandwagon to ensure investment.

This year, we will be launching a brand new programme where learners will be able to identify, prioritise and implement environmental social governance at their current or future workplace.

Do you want to get involved and be one of our 5 students taking on the ESG Leadership training programme?

Get in touch - [email protected] 

To learn more about ESG - https://www.fiftyshadesgreener.ie/esg

And don't forget to subscribe to our newsletter. 

Thank you for reading today!

 The FSG Team 💚 

Resources

https://www.weforum.org/agenda/2023/01/the-importance-of-esg-sustainable-future-davos-2023/

https://www.esgtoday.com/eu-lawmakers-adopt-corporate-sustainability-reporting-rules/ 

https://extension.harvard.edu/blog/what-is-sustainable-finance-and-why-is-it-important/ 

ESG Research.pdf ​​

https://www.amundi.lu/professional/Local-Content/Producsheet/Amundi-Planet-Emerging-Green-One/Amundi-Planet-Emerging-Green-One  ​

https://www.irishtimes.com/special-reports/2022/10/14/sustainable-finance-has-become-a-top-priority-for-many-governments/ ​