GREENING THE BANKING SYSTEM

GREENING THE BANKING SYSTEM, TAKING STOCK OF G20 GREEN BANKING PRACTICE. THIS IS A TOPIC I REALLY WANT TO GET INTO BECAUSE THIS IS WHERE IT ALL STARTS. LET’S LOOK AT THE EXECUTIVE SUMMARY FOR THIS PAPER PUBLISHED BY THE UNITED NATIONS. HERE IS THE LINK FOR IT  http://unepinquiry.org/publication/greening-the-banking-system/

Green banking practices are at different stages of evolution across the G20. Emerging green banking practices across G20 countries can be grouped into two categories:

• Mainstreaming environmental factors across bank strategy and governance, evolving from an early focus on due diligence at project level to consideration of environmental factors across credit risk functions. Now the focus is shifting to more strategic action, with leading banks exploring environmental stress testing and links between environmental and financial performance.

• Mobilizing capital for specific green assets through loan origination, the provision of credit and savings’ products as well as capital markets activities. Banks are the primary source of funding for renewable energy investments, and critical sources of capital for infrastructure and small and medium enterprises (SMEs). Now, banks are moving from “risk to opportunity” in new sectors, such as energy efficiency, with leading banks working to drive positive impact across all activities.

THIS IS WHAT WE HAVE BEEN DISCUSSING FOR A LONG TIME, RISK TO OPPORTUNITY. WHAT DOES THAT MEAN?

A diverse range of sector-specific market and policy factors has motivated the evolution of the green banking agenda. Key catalysts for action include rising public expectations, the recognition of environmental issues as real drivers of financial risk and identification of green loan origination opportunities.

Green banking progress in the G20 has largely been the result of market-led action, including individual institutional leadership, the collective efforts of banking associations, and international initiatives. Some governments and regulators across the G20 are taking action to support the greening of the banking system.

Public finance can play a catalytic role in making the business case for green banking, through risk sharing and incentive mechanisms to address market failures and leverage private capital.

LEVERAGE PRIVATE CAPITAL, THESE FUNDS NEED TO BE PLACED INTO PROJECTS THAT WILL CREATE NEW DEBT, GREEN DEBT AND PRODUCE EVENTUAL RETURNS.

Barriers to green banking can be understood in a general hierarchy of importance and challenge:

• A lack of real economy demand, stemming from the presence of unmitigated externalities or policy uncertainty;
• The lack of a clear business case, where risk/return profiles of potential projects are un-bankable;
• Negative impacts on competitiveness and a lack of a level playing field;
• A lack of appropriate practitioner capacities or a supportive financial culture;
• A lack of appropriate information flowing between the market and banks; and
• Issues of policy coherence and regulatory alignment.

Several conclusions can be drawn regarding green banking market practice in the G20:

• There is some convergence in practitioner understandings of green banking, but perceptions and priorities vary significantly across the G20.
• The lack of a global framework or body to structure green banking practice (in comparison to investment, for example) may be holding back progress.
• The success of efforts to greening the banking system is contingent on levels of financial system development and broader environmental regulatory contexts.
• There is an emerging rationale for public action to support greening of the banking system – as closely linked to long-term economic growth as it is to sustainability.

ALRIGHT SO WHAT’S THE SOLUTION LET’S KEEP READING.

G20 countries have committed to realignment of growth pathways with sustainable development – as evidenced by recent Intended Nationally Determined Contributions (INDCs) and agreement of the Sustainable Development Goals (SDGs).

Meeting these goals while maintaining economic growth is the defining challenge for the G20 over the coming decade. A thriving green banking sector can play a fundamental role in this effort – provided governments are able to deliver a level playing field, share emerging best practices, and unlock new opportunities for investments in sustainable growth.

Emerging policy options include:
• Develop comprehensive voluntary principles;
• Clarify green definitions;
• Develop green securities to support maturity alignment;
• Use public finance to leverage green loans and credit;
• Enhance professional education;
• Develop national collaborative processes;
• Expand global learning networks;
• Collect data and improve disclosure; and
• Support policy alignment.

THIS PUBLICATION IS WELL WORTH THE READ AND IT’S A SHORT READ TOO ON 30 PAGES INCLUDING THE INDEX ..LOL.. YOU CAN GET THROUGH IT.

YOU SEE EVERYTHING THAT IS COMING IS OUT THERE AND HAS BEEN WRITTEN ABOUT FOR A FEW YEARS. WE ONLY NEED LOOK FOR IT. THIS PARIS AGREEMENT IS REALLY A TOOL WHICH IS BEING USED TO UNLOCK PRIVATE CAPITAL AND PUT IT TO WORK. THE SIDE EFFECTS OF USING THAT TOOL IS TREMENDOUS AND WILL BENEFIT SO MANY COUNTRIES IN NEED AND PEOPLE ALL ACROSS THE GLOBE, BUT MAKE NO MISTAKE ABOUT ANY OF THIS THE PRIMARY REASON FOR THIS AGREEMENT IS TO PRESERVE AND GROW TRILLIONS IN PRIVATE CAPITAL FIRST. REMEMBER IN THIS TIME OF ZERO INTEREST AND NEGATIVE YIELDS WHAT IS PRIVATE CAPITAL TO DO?

THE ANSWER WE READ IT IN THE OPENING SENTENCE IS TO TURN RISK INTO OPPORTUNITY. DO YOU UNDERSTAND NOW???
THE CURRENT BANKING SYSTEM IS BROKE RIGHT NOW RIGHT? SO WHAT IS ONE TO DO? START ANOTHER SYSTEM BUT THIS TIME MAKE IT APPEALING TO ALL AND MAKE IT INCLUSIVE SO YOU CAN REAP THE MOST OPPORTUNITY FROM THE CONVERSION.

DO WE CARE REALLY ABOUT THE REASONS OR THE MOTIVES BEHIND IT? I DON’T REMEMBER THERE IS NO ROOM FOR MORALITY IN MONEY WHAT IS IMPORTANT IS THE END RESULT WHICH IS MANY EMERGING ECONOMIES WILL FINALLY GET THE MUCH NEEDED FUNDS TO COMPLETE THEIR INFRASTRUCTURE WHICH HELP THEM RISE UP AND BECOME PRODUCTIVE NATIONS.

SO ONE MORE TIME IF YOU HAVE THE CHANCE PLEASE READ THIS PUBLICATION IT WILL GIVE YOU MANY AHA MOMENTS.
http://unepinquiry.org/publication/greening-the-banking-system/

TAKE TIME AND ENJOY THE EXPERIENCE
LOVE TO ALL, ML

BE SURE TO FOLLOW US ON TWITTER AND LIKE US ON FACEBOOK AND SUBSCRIBE TO US ON YOUTUBE…THANKS

3 thoughts on “GREENING THE BANKING SYSTEM

  • Ron

    Thanks for the fine article and I will read the publication

  • Trident704

    Wonderful post! I may be sliding down a greased pole to hell, but I agree that there’s no judgement call to be made as far as the morality context of getting private capital involved through climate, or green finance. I get it; nobody wants polluted air, nasty water, or garbage littering up the planet. My point is whatever it takes to morph from the old system to the new global finance reality has been carefully crafted, managed, and will be implemented with as few bumps as possible. Private over public capital is, and will, prime the pump of investment returns.

Leave a Reply

Your email address will not be published.