onshore wind and hydropower,
7 suggesting thus that despite the preparedness to take
a broad approach to the notion of green, there is a general requirement that the
project in question should at least be recognised as green.
Commercial financial institutions have developed their own guidance on what
constitutes “green” in financing. So too have regional and national organisations.
The guidances usually are expressed as high level definitions and their open-ended
nature is intended to provide a large degree of flexibility and tolerance but could give
rise to problems of contractual interpretation.
8
An immediate observation is that these criteria mainly relate to the environment;
although there are a few which address more specifically the issue of sustainability or
sustainable development whilst smaller few make mention of the idea of investments
and socio-economic considerations. Also as a UNEP Briefing Paper states:
the definition of green finance is evolving. From the financing of investments that provide
environmental benefits in climate change mitigation and adaptation, “green finance” is
evolving to include sustainable natural resource management, inclusive finance, education
and other sustainable development criteria identified by the Sustainable Development Goals
(SDGs) in the 2030 Agenda.
9
The diversity or differences could be seen in technical or scientific commentaries,
as against mere policy statements. Höhne and others state that
Green finance is a broad term that can refer to financial investments flowing into sustainable
development projects and initiatives, environmental products, and policies that encourage
the development of a more sustainable economy. Green finance includes climate finance but
is not limited to it. It also refers to a wider range of other environmental objectives, for
example industrial pollution control, water sanitation, or biodiversity protection.
10
Similarly, it has also been suggested:
Green finance is often used interchangeably with green investment. However, in practice,
green finance is a wider lens including more than investments as defined by Bloomberg New
Energy Finance and others. Most important is that it includes operational costs of green
investments not included under the definition of green investment. Most obviously, it would
include costs such as project preparation and land acquisition costs, both of which are not
just significant but can pose distinct financing challenges.
11
The G20 Green Finance Study Group in 2016, described green finance as the
“financing of investments that provide environmental benefits in the broader context
of environmentally sustainable development”.
12 The report also shows that the
7 GIB (2014b). Green Investment Policy. http://www.greeninvestmentbank.com/media/44648/gib_
green-investment-policy_1114.pdf.
8 This issue is addressed below.
9 UNEP Briefing Paper at http://unepinquiry.org/wp-content/uploads/2017/11/Greening_the_Finan
cial_System_Exploring_the_Ways_Forward.pdf; consider too the UNEP Task Force on Climaterelated Financial Disclosures (TCFD) Recommendations of June 2017 at https://www.fsb-tcfd.org/.
10 Höhne et al. (2012).
11 Zadek and Flynn (2013); Bloomberg New Energy Finance referred to in the quotation is a
research organisation on energy finance (https://about.bnef.com/about/).
12 http://www.g20.utoronto.ca/2016/green-finance-synthesis.pdf at p. 3.
134
J. Chuah
7 suggesting thus that despite the preparedness to take
a broad approach to the notion of green, there is a general requirement that the
project in question should at least be recognised as green.
Commercial financial institutions have developed their own guidance on what
constitutes “green” in financing. So too have regional and national organisations.
The guidances usually are expressed as high level definitions and their open-ended
nature is intended to provide a large degree of flexibility and tolerance but could give
rise to problems of contractual interpretation.
8
An immediate observation is that these criteria mainly relate to the environment;
although there are a few which address more specifically the issue of sustainability or
sustainable development whilst smaller few make mention of the idea of investments
and socio-economic considerations. Also as a UNEP Briefing Paper states:
the definition of green finance is evolving. From the financing of investments that provide
environmental benefits in climate change mitigation and adaptation, “green finance” is
evolving to include sustainable natural resource management, inclusive finance, education
and other sustainable development criteria identified by the Sustainable Development Goals
(SDGs) in the 2030 Agenda.
9
The diversity or differences could be seen in technical or scientific commentaries,
as against mere policy statements. Höhne and others state that
Green finance is a broad term that can refer to financial investments flowing into sustainable
development projects and initiatives, environmental products, and policies that encourage
the development of a more sustainable economy. Green finance includes climate finance but
is not limited to it. It also refers to a wider range of other environmental objectives, for
example industrial pollution control, water sanitation, or biodiversity protection.
10
Similarly, it has also been suggested:
Green finance is often used interchangeably with green investment. However, in practice,
green finance is a wider lens including more than investments as defined by Bloomberg New
Energy Finance and others. Most important is that it includes operational costs of green
investments not included under the definition of green investment. Most obviously, it would
include costs such as project preparation and land acquisition costs, both of which are not
just significant but can pose distinct financing challenges.
11
The G20 Green Finance Study Group in 2016, described green finance as the
“financing of investments that provide environmental benefits in the broader context
of environmentally sustainable development”.
12 The report also shows that the
7 GIB (2014b). Green Investment Policy. http://www.greeninvestmentbank.com/media/44648/gib_
green-investment-policy_1114.pdf.
8 This issue is addressed below.
9 UNEP Briefing Paper at http://unepinquiry.org/wp-content/uploads/2017/11/Greening_the_Finan
cial_System_Exploring_the_Ways_Forward.pdf; consider too the UNEP Task Force on Climaterelated Financial Disclosures (TCFD) Recommendations of June 2017 at https://www.fsb-tcfd.org/.
10 Höhne et al. (2012).
11 Zadek and Flynn (2013); Bloomberg New Energy Finance referred to in the quotation is a
research organisation on energy finance (https://about.bnef.com/about/).
12 http://www.g20.utoronto.ca/2016/green-finance-synthesis.pdf at p. 3.
134
J. Chuah