The paper focuses on the role of banking diversity on access to finance for SMEs in the green economy. It demonstrates the relationship between the green economy and SMEs, and argues that access to finance is not just a function of broader macroeconomic factors but also the structure of the banking system. Specifically, it demonstrates that different types of banks, as a result of differences in balance sheets, lending horizons, and local presence, were equipped differently to service SMEs financing needs. In particular, the analysis highlights the role of non‐commercial banks in a diverse banking sector to provide SME lending. Banking diversity contributed to a better servicing of the different financing needs in the economy and ensures a larger stability in lending to SMES during financial instability.
In 2014, the UNEP Finance Initiative (UNEP FI) and the University of Cambridge Institute for Sustainability Leadership (CISL, working with and on behalf of the Banking Environment Initiative – BEI) commissioned a study entitled, “Stability and Sustainability in Banking Reform – Are Environmental Risks Missing in Basel III?”. The resulting report pointed to the material links between financial stability and environmental (and social) risks.
Since then, bilateral engagements with a number of banking regulators have taken place. In addition, an Expert Dialogue between the worlds of Science and Finance was convened jointly by UNEP FI, CISL and the UNEP Inquiry into the Design of a Sustainable Financial System (‘the UNEP Inquiry’) in April 2015, with a view to refining a common understanding of the stability-sustainability link and to exploring how this link might be addressed going forward.
This briefing provides a synthesis of the current state of thinking on the topic, based on the work above. It is intended as a means of sharing key findings with policy-makers and of engaging them on the matter.
In recent years, a plurality of different governance initiatives has emerged that are designed to expand the disclosure of environmental risk within financial markets. The emergence of these initiatives represents an important policy development, and it has the potential to reduce environmental risk within the financial sector by incentivizing investments in sustainable economic activity capable of long-term value creation. Unfortunately, environmental risk disclosure has yet to be assessed as a field of governance activity in addition to its potential effectiveness in improving disclosure within financial markets.
Over the past 30 years, China has developed rapidly to become the world’s second largest economy, reaching the status of a middle-income country. Realizing this success, however, has involved a development approach entailing massive and inefficient resource use, and extensive damage to the quality of air, water and soil. Transforming from a resource- and pollution-intensive economy to a green economy is now a strategic priority for China. Success depends on the development of green industries and the transformation and reduced importance of many traditional industries. Success will be built heavily on green finance, and this is where China is headed.
The aim of this book is to develop specific proposals for greening China’s financial system, based on an analysis of current practice in China and an exchange of experience with international experts. The book proposes a framework for actions covering five key areas that, if adopted by the Chinese government, would promote the systematic development of green finance:
A. Establish and strengthen legal frameworks, including environmental laws and law enforcement that contribute to the demand for green finance.
Ethiopia has embarked on a national strategy of building a climate-resilient green economy. This model therefore does not focus only on mitigation strategies, but it also valorises the importance of improving climate-resilience, described as the ability to anticipate and adjust to climate change risks. In particular, the need to transit to a green economy model that is more inclusive is receiving growing attention as a pathway that can lead to sustainable development.
This report explores the linkages and contribution of inclusive green economy policies and strategies to structural transformation in Ethiopia. In this regard, the report provides an assessment of how inclusive green economy-related policies can reinforce the structural transformation agenda of Ethiopia; and how structural transformation policies and strategies can enhance the development of an inclusive green economy. The intent is to enhance understanding and promote the adoption of inclusive green economy policies that will contribute to achieving the structural transformation goals of Ethiopia.