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Über dieses Buch

This book offers a comprehensive discussion of how green finance has been growing thus far and explores the opportunities and key developments ahead, with particular emphasis on Europe. The main features of the market, the key products, the issue of correctly defining green finance, the main policy actions undertaken, the risk of green washing and the necessary steps to mainstream green finance are discussed in depth. In addition, the book analyses some highly relevant aspects of the market that so far have not been sufficiently explored in the policy, industry and academic debate. This includes the potential role of digitalisation and blockchain in fostering green finance, the crucial role of the effective financing of the agriculture to reach climate and environmental targets and the possible relationship between sustainable finance and other forms of "alternative" finance. This book will be of interest to academics, practitioners, financial institutions and policy makers involved in green finance and to the finance industry in general.

Inhaltsverzeichnis

Frontmatter

State of the Art

Frontmatter

Chapter 1. An Overview of Green Finance

Abstract
This chapter aims at giving an overview of the key characteristics of the green finance market as it stands today. To this extent, the chapter first recalls the main roots of the role of ethics in finance. Hence, it deals with the political process culminating with the Paris Agreement and the adoption of the Sustainable Development Goals as well as highlights the role of green finance in such a process. Hence, it provides a detailed picture of the market by describing the types of existing green securities and financial products and showing the recent investment trends. Finally, the chapter summarises the key challenges still ahead for green finance in order to be considered a stable component of the modern financial landscape.
Romain Berrou, Philippe Dessertine, Marco Migliorelli

Chapter 2. Defining Green Finance: Existing Standards and Main Challenges

Abstract
The issue of clearly defining green finance is not a secondary one. On the contrary, it is central to the debate surrounding the future of the market. In this respect, this chapter provides an assessment of the questions linked to the lack of a clear definition of green finance and of the risk associated. The main approaches today in use in the financial industry for determining which sectors are eligible for green funding are first reviewed. Hence, the main principles adopted to label a financial security as “green” are discussed, in particular as concerns green bonds and green loans. Finally, the different external review options and the risk of greenwashing are treated.
Romain Berrou, Nicola Ciampoli, Vladimiro Marini

Chapter 3. The Development of Green Finance by Sector

Abstract
This chapter analyzes the development of green finance by sector. To this extent, it first examines the role of multilateral development banks in launching and fostering green finance and sustainable finance. Hence, it assesses the approaches adopted by industrial companies to embrace sustainable finance, in particular as concerns the implementation of sustainability and environmental reporting. Finally, it deals with the greening of private financial institutions (in particular, banks), underlying their crucial role in facilitating the development of green finance.
Olaf Weber, Amr ElAlfy

Chapter 4. Sustainable Finance Management

Abstract
The issue addressed in this chapter is how firms need to shape up or reshape in order to suit the green finance evolution. In this respect, to tap green finance a company would need to structure (if a start-up) or reorganise (if already in business) in a way to be sustainability compliant and to be able to display that credibly. In turn, this passage demands that a firm adopts a sustainable finance management approach, which may be achieved by hiring sustainable finance managers (especially in medium–large firms) or outsourcing that function to external consulting experts. In both cases, the firm needs to be able to get a good external evaluation, typically a credible ESG (Environment, Social, Governance) rating.
Giovanni Ferri, Francesca Lipari

Chapter 5. Financial Performances of Green Securities

Abstract
Empirical research in financial markets has been interested in the relationship between the financial performance of an exchange-listed company and its behavior as corporate citizen for a long time. Today, this debate concentrates in particular on the financial performance of sustainable investment projects. In such a context, this chapter analyzes the state of the literature on the performance of the fast-growing segment of green bonds as well as gives a general overview on the relationship between environmental, social, and governance (ESG) performances and financial performances.
Dirk Schiereck, Gunnar Friede, Alexander Bassen

Chapter 6. Institutional Initiatives to Foster Green Finance at EU Level

Abstract
The Paris Agreement and the United Nations’ 2030 Agenda evidenced the environmental risk implications of modern economies and consequently defined concrete global climate targets. Since then, the European Union has been adjusting its policy accordingly. In this respect, the aim of this chapter is twofold. First, it describes the main initiatives launched to increasingly reorient the European financial system towards sustainable investing. Second, it depicts the role of the European institutions in the global cooperation for a more sustainable development.
Vladimiro Marini

The (Long) Way Forward and New Opportunities

Frontmatter

Chapter 7. From Transaction-Based to Mainstream Green FinanceMainstream Green Finance

Abstract
Market-based dynamics can play a significant role in the development of green finance. Nevertheless, they will be unlikely effective to mobilise a sufficient amount of resources to properly contribute to finance the most ambitious environmental goals. This chapter analyses the main areas of intervention in the attempt to mainstream green finance, by pointing out in particular the importance of coherently factoring-in environmental risks in investors’ decision-making processes, of effectively channelling the market demand towards green securities, of encouraging the banking sector to embrace green finance and of pushing policy makers to promote and support green investments.
Marco Migliorelli, Philippe Dessertine

Chapter 8. The Development of Green Finance in EU Agriculture: Main Obstacles and Possible Ways Forward

Abstract
This chapter analyses the causes of the very limited role played by green finance in agriculture, a sector that is responsible for about 25% of the greenhouse gas emissions. By focusing on the situation in the European Union (EU), it is first argued that the structure of the farming industry (composed in many cases of small businesses) and the actual model of financing of agriculture (backed by public support through grants and banking loans) are among the major hurdles to the development of green-labelled financing instruments. A number of options are presented to overcome these hurdles, including dedicated financing facilities and the contribution of the cooperative sector. The development of green finance in agriculture would contribute to reach the most ambitious environmental goals.
Marco Migliorelli

Chapter 9. Fintech, Digitalization and Blockchain: Possible Applications for Green Finance

Abstract
The objective of this chapter is to delineate the potential of fintech and blockchain to unlock the mobilization of green finance and to overcome respective barriers by explaining the key functionalities of applications including their key benefits and limitations. Fintech and blockchain facilitate access to new sources of finance and investment, from a larger investor base—especially from private investors. In addition, they operate in decentralized systems, bypassing traditional intermediaries such as banks or other financial institutions, decreasing costs and inefficiencies. Blockchain technology further enables effective monitoring, reporting and verification, increases transparency and accountability and reduces the risk of greenwashing. However, uniform standards and definitions for green finance as well as adequate legal and regulatory frameworks are still required.
Gregor Dorfleitner, Diana Braun

Chapter 10. Sustainable Finance: A Common Ground for the Future in Europe?

Abstract
Sustainable finance is a recent term that defines non-predatory finance, attentive to the production of value and aimed at fostering sustainable development. Moving from the classic theory, value is defined as a surplus generated through the production of both tangible and intangible outcomes. As by-products, positive and negative externalities are created and should be accounted with a positive or a negative sign to describe the actual economy outcomes. Applying this theory to financial intermediaries implies a valuation of their capacity to drive capitals in activities intensive in green and social productive capital, to support firms aimed at preserving the environment and at including vulnerable subjects, to invest capital with a human design and to exploit factors for a sustainable production.
Silvio Goglio, Ivana Catturani

Chapter 11. Green Finance Today: Summary and Concluding Remarks

Abstract
This chapter offers an overview of the main discussions provided in the book and states some concluding remarks. The main drivers of the development of green finance to date are first recalled, in particular as concerns the engagement of international financial organisations and the emergence of concrete market incentives for investors to issue or to buy green securities. Then, the importance of the realisation of some key conditions necessary for mainstreaming green finance is further discussed, including the proper inclusion of environmental risks in the investors’ decision-making process, the effective channelling of the demand, the creation of specific green financial products and facilities and, last but not the least, the political commitment of the international community toward the environment goals.
Marco Migliorelli, Philippe Dessertine

Backmatter

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