Green finance

Asset managers, bankers, central bankers¹… Everybody in finance is talking about climate change and sustainability.

But what do green investments mean in practice?

A report by Common Wealth found that some climate-themed funds invest in oil & gas companies such as ExxonMobil. More broadly, the largest holdings of climate funds were Big Tech and finance. Adrienne Buller, the author of the study, writes “what do these ostensibly climate-focused funds really contribute to combatting the climate crisis, reducing emissions or driving a rapid transition to low carbon economic activities? There is nothing in the specific labelling or remit of these funds that would require them to invest in the green economy, in financial instruments design to drive the transition of business models to lower carbon activities, or other similar investments.” (emphasis mine)

There are plenty of metrics by which providers assess climate risk. Given different methodologies and the complexity of estimating climate risk, there is some divergence in the metrics. However, Chiara Colesanti Senni and Julia Anna Bingler do find that “metrics tend to converge for companies that are most and least exposed to climate risk”.

Data and tools for monitoring climate change and financial assets:

• Asset Resolution
• CDP
• CDSB
• FinanceMap
• Paris Agreement Capital Transation Assessment (PACTA)

Organizations promoting green finance:

• 2 Degrees Investing Initiative (2DII)
• Climate Bonds Initiative
• InfluenceMap
• KR Foundation
• Network for Greening the Financial System (NGFS)
• Pacte Finance-Climat
• Reclaim Finance
• UN Environment Programme Finance Initiative (UNEPFI)
• Net-Zero Banking Alliance (related to UNEPFI)

Organizations advocating broader economic change, including green finance:

• Council on Economic Policies (CEP)
• New Economics Foundation (NEF)
• Sustainable Finance Lab (SFL)

1. For a critical note, read Central banks and climate change: all hot air.