Sustainable finance (2024)

FAQs

What are sustainable finance solutions? ›

Sustainable financing solutions

Get access to products and services that enable you to make sustainable choices and fulfil your company's obligations and aspirations on key socio-economic issues such as climate change.

Pillar 1: Definition: Use of proceeds. Pillar 2: Selection: Process for project evaluation. Pillar 3: Traceability: Management of proceeds. Pillar 4: Transparency: Monitoring and reporting.

Sustainable finance is about financing both what is already environment-friendly today (green finance) and what is transitioning to environment-friendly performance levels over time (transition finance).

By channeling capital towards environmentally friendly projects and businesses, sustainable finance can help reduce greenhouse gas emissions, promote renewable energy, and support sustainable land and water use.

Data Collection and Management. The first major challenge is data collection and management. Banks and financial institutions (FIs) must be able to collect, analyze, and report on various clients' data points to demonstrate compliance with the standards.

More generally, according to the EU, "sustainable finance" refers to the process of integrating environmental, social and governance (ESG) issues into investment decisions in the financial sector, leading to more long-term investment in sustainable economic activities and projects (Source).

Financial sustainability is the capacity of a firm to earn revenue or get a return on an investment that covers all expenses and makes a profit. It assesses whether a project is viable for investment and whether investing resources in it will generate a sufficient return for investors.

Sustainable finance is making investment decisions that consider the environmental, social, and governance (ESG) elements of an economic activity, project, company, or organization.

Sustainable investments help reduce poverty, improve health and well-being and promote gender equality. In addition, they reduce financial risks and improve long-term profitability, while contributing to the achievement of the Sustainable Development Goals of the United Nations (SDG).

What are the criteria for sustainable finance? ›

These criteria include analysis of the impacts of business activities in terms of carbon emissions, biodiversity protection, waste management, etc.; societal impacts; and the set of rules that govern the way companies are controlled and managed.

Examples include active ownership, credit for sustainable projects, green bonds, impact investing, microfinance, and sustainable funds. It promotes and enhances economic competitiveness, efficiency, and prosperity now and in the future.

Sustainable finance involves making investment decisions that consider not only financial returns but also environmental, social and governance factors. Also referred to as “green finance,” it is a broad term with multiple definitions depending on context.

Financial sustainability is the capacity of a firm to earn revenue or get a return on an investment that covers all expenses and makes a profit. It assesses whether a project is viable for investment and whether investing resources in it will generate a sufficient return for investors.