BIAC, Green Finance, Key Business Considerations for Financing a Sustainable and Low Carbon Economy

BIAC, Green Finance, Key Business Considerations for Financing a Sustainable and Low Carbon Economy

BIAC Discussion Paper – June 2016

CICA Summary

The share of private sector investment in green finance is rising by 26% from 2013 to 2014.

Private sector investment depends on an assurance that the policy environment is stable and predictable for the duration of projects. Increasing regulatory coordination should be an overarching priority.

A core role of supervisors and regulators in green finance should be to help assist a managed transition to a low carbon economy that ensures minimal market disruptions, while also considering the other market and regulatory challenges that firms face.

“Crowd-in” private finance should be encouraged through national development banks and the use of concessional loans, which would help to reduce investment risk and shape investment trends.

There is a lack of a globally agreed definition on green finance, more effort needs to be put into connecting some corporate management teams with the risk-modelling capabilities of some investors.

The priority for policymakers must be a level playing field for businesses operating in competitive global markets.

In heavily indebted poor countries BIAC calls for a revision of the sustainable lending guidelines, with a view to provide greater possibilities for commercial loans accompanying the respective products/projects as requested by EIC and CICA for several years.

There remains a prevalent misconception that including ESG issues in investment decision-making conflicts with the fiduciary duty of an investor.

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