The road to green finance

Do we have good news from the Madrid Climate Summit (COP25)? For those of us working on environmental impact reduction and green finance, this meeting has been a breath of fresh air. Areas that seemed totally alien to environmental sustainability are also seeking to renew the air they breathe. One of these is the world of finance, which occupied a large part of the summit.

Towards global “green finance”

There are obstacles and resistance on the road to environmentally responsible finance. However, some milestones of European or international scope can already be highlighted:

  • 2014, October: A Directive of the European Parliament and of the Council of Europe extends non-financial (social and environmental) reporting requirements by large companies.
  • 2018, March: The European Commission presents the ‘Action Plan: Financing sustainable development’.
  • 2018, December: 24th Climate Summit in Poland. Five international financial institutions commit to design and finance appropriate services for a low-carbon economy.
  • 2019, September: UN General Assembly in New York. 130 banks sign up to the Principles for Responsible Banking.
  • 2019, December: Collective Climate Commitment, in the context of the 25th Climate Summit. 31 banks commit to develop the necessary methodologies to measure climate impact and alignment with global and local climate goals.

From theory to practice

A few weeks after the Climate Summit, it became known that BlackRock, the world leader in fund management and main shareholder of Spanish banks, had changed its strategy. In a letter, its CEO stated:

“We believe that sustainable investing will be the cornerstone of clients’ portfolios going forward”. Laurence D. Fink.

Care for the environment has already gone from “trend” to “must”.

The boom in green lending points in the same direction. It is not only companies developing clean energy that are targeted. A green loan is available to any company wishing to finance environmental impact reduction projects. At the same time, these new forms of financing are a double-edged sword. There are those who call themselves sustainable without having the data to justify it. The European Commission is working on a regulation against “greenwashing”.

Moving from theory to practice requires reliable measuring instruments. The Climate Summit provided space for technology initiatives that facilitate this leap. There we presented our proposal for measuring environmental impact. At Greemko, we believe that measuring is the first step towards improvement. Using cutting-edge digital technology, they provide businesses of any size or sector with justified access to green loans. Its software allows the global management of all the elements that have an environmental impact.