The emergence of green bonds as an integral component of climate finance in South Africa (original) (raw)

A New Tool in the Fight against Climate Change: Green Bonds

Kadir Has University Center for Energy and Sustainable Development, 4th Graduate Student Conference, 2021

There is a reality and danger defined as climate change on the agenda of the world. Climate change poses the greatest threat to humanity. It is obvious that environmental shocks will be more extreme and more frequent. No government or institution can solve this problem alone. Besides, climate risk has now become a financial risk. As such, investors have sought new products across all asset classes that somehow address the challenges of climate change (Jack Morton Auditorium, 2018). Therefore, there was a need for interaction between environmental officials and financial experts, and green bonds, one of the tools of green finance, emerged. Green bonds have been introduced to finance emission reductions, sustainable development, and other cleaner production investments that help achieve the Paris Agreement's 2°C temperature target. Green bonds play an essential role in the fight against climate change because green bonds are used only for environmentally friendly projects. Previous studies have found that investments in environmental protection rarely bring economic benefits to companies. But this view has changed as the economy has improved, and current research shows that green practices can bring profits to companies. For this reason, green bonds are increasingly being applied to finance emission reductions and sustainable development that help achieve the 2° C temperature target of the Paris Agreement.

GREEN BONDS TO MITIGATE CLIMATE CHANGE

IJARW, 2021

Weather conditions are changing dramatically as a result of climate change. Climate change needs to be dealt with urgently. Global carbon emissions and greenhouse gas emissions are largely produced by energy production and consumption. It would be more effective to counteract the environmental effects of emissions through the use of renewable energy and other low-carbon electricity sources. All countries need strong political will. Climate change also requires the involvement of financial institutions and big corporations. We will investigate the inceptions, consequences of climate change, and methods to mitigate them; we will analyze the ways to utilize clean technologies like solar, wind, etc. with a comparative study of developing versus developed countries. By reducing carbon emission in rich countries and funding clean transitions in poor countries, taxes with carbon emission control may well redistribute resources among these countries. For energy efficiency and renewable energy, the budget allocated by the government and capital from banks is limited, so Green Bonds have a lot of potentials.

Green bonds for the Paris Agreement and sustainable development goals

Environmental Research Letters, 2019

The Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC) and the Sustainable Development Goals (SDGs) of the United Nations Development Programme (UNDP) both entail substantial global investments through cost-efficient, long-term financing. Noted for their risk-alleviating features and appeal to institutional and socially responsible investors (SRIs), green bonds are gaining prominence in climate change and sustainable development finance frameworks. This study is the first to thoroughly examine publicly reported green bond proceeds allocations from 53 organizations to projects and assets throughout 96 countries from 2008 to 2017. Green bond markets are growing rapidly, and yearly proceeds allocation trends reveal increasing disbursements to renewable energy, clean water, low-carbon transportation, and other Paris Agreement and SDG-related investment categories. Circle plot analysis reveals unique allocation trends to specific green sectors at both regional and national levels. International finance institutions (IFIs) allocated the largest share of proceeds by both frequency and volume, and the total environmental impact estimates for the projects and assets financed with green bonds in this study sample include over 108 million tonnes of carbon dioxide equivalent (tCO2e) in greenhouse gas (GHG) emissions reductions and over 1,500 gigawatts (GW) in added renewable energy capacity. The study concludes with suggestions for improving green bond post-issuance reporting and provides insights for future green bond applications in expanding Paris and SDG agendas.

Climate change: An unprecedented investment and financing challenge

In December the climate conference COP21 will be held in Paris. The main objective is to find a binding agreement on keeping global warming below 2°C. Putting the world economy on a low carbon growth path requires increasing carbon prices and stepping up infrastructure investment. A crucial element in the negotiations is raising USD 100 bn a year from 2020 onwards to support climate action in the developing countries.

Climate Finance: Unlocking Funds Toward Achievement of Climate Targets Under the Paris Agreement

Climate Action, 2019

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Climate Change and Finance in Africa: Some Theoretical and Practical Justifications

Research Journal of Finance and Accounting, 2020

Global warming evidence is worrisome, and its impact has spread across all continents of the world. Unfortunately, many countries are not paying sufficient attention to environmental damages resulting from climate change. Commitments to emissions reductions are also not being honored by countries. This exploratory paper seeks to justify the need for African countries to pursue clear-cut climate mitigation and adaptation strategies and the necessity of integration across multiple disciplines and embraced by both public and private sectors. Climate change is a source of financial risk; it threatens the stability of the financial system through systemic risk factors, produces negative externalities, and creates moral hazard. Innovative debt and equity instruments for funding climate-compatible urban infrastructure are discussed and recommendations made for assessing climate projects.

Stepping Up Climate Action in Sub-Saharan Africa: The Role of G20 and COP26

Rome, IAI, June 2021, 23 p. (IAI Papers ; 21|27), ISBN 978-88-9368-203-9, 2021

Several shortcomings in the development and climate finance systems currently undermine the capacity of Sub-Saharan Africa to tackle climate change. Indebtedness and climate vulnerability progressively reinforce each other, representing one of the major obstacles to stepping up climate action in the region. Insufficient climate finance, the financing gap on adaptation and loss and damage, as well as inadequate recovery measures are other critical issues. The crucial step for strengthening climate action in Sub-Saharan Africa consists in undertaking systemic reforms within the international development and climate finance architecture. The Italian-led G20 can play a key role to promote the necessary global financial governance reforms and, by establishing an inclusive dialogue with African countries early on, it can increase the chances of an ambitious outcome at the 26th Conference of the Parties (COP26) that will aim for an agreement on the most divisive climate finance issues, with significant implications for Sub-Saharan Africa.

Climate Finance at COP21 and After: Lessons Learnt

Finance has emerged in the last few years in and outside the Conference of the Parties (COP) process as a key ingredient of climate policy design. It also appears to be a key sector for structural reform in order to align it with the new low-carbon horizon. This policy brief draws lessons from a discussion platform launched jointly by CEPII and France Stratégie, which welcomed more than thirty contributions on climate finance issues from various experts and citizens in the four months leading to COP21. Both these contributions and the final text adopted by the Parties indicate that the financial question will remain essential in the near future in order to consolidate and nurture the Paris Agreement. In this brief, three directions for future debates are analyzed. First, the equity question remains open, through the financing schemes to guarantee a minimum of $100 billion in annual transfers to developing countries in the name of the principle of " common but differentiated responsibilities ". The question of an increasing ambition to implement the " Intended Nationally Determined Contributions " through specific financial instruments is also discussed. Finally, the necessary long-term objective of a net decarbonization of the world economy invites us to look for more structural reforms in the financial sector.