Green finance refers to any financial instrument or investment – including equity, debt, grant, purchase & sale or risk management tool (for example: investment guarantee, insurance product or commodity, credit or interest rate derivative, etc.) – issued under contract to a firm, facility, person, project or agency, public or private, in exchange for the delivery of positive environmental externalities that are real, verified and additional to business as usual, whereby such positive externalities result in the creation of transferrable property rights recognised within international, regional, national and sub-national legal frameworks.
Climate Finance is an emerging form of green finance available for projects in developing countries that help reduce emissions or adapt to climate change. This is achieved either via increasing the revenues available to public and private development projects, such as tariff support or carbon finance, or by improving project capital structure, for example by reducing the costs of debt and equity.
Climate finance is a growing sector in international development and environmental finance. Governments of the world are continually making more resources available for climate finance, and have committed to raising $100 billion per year by 2020 – from public and private sources – under the Paris Agreement on climate change. To find out more about the range of climate finance sources and instruments, please click here or contact us.