Green Trends in the Global Financial System

DOI: 10.20542/0131-2227-2016-60-9-5-16
B. Porfir’ev, Institute of Economic Forecasting, Russian Academy of Sciences (INP RAN), 47, Nakhimovskii Prosp., Moscow, 117418, Russian Federation (

Acknowledgements. The article has been supported by a grant of the Russian Foundation for Humanities (Project 15-02-00411 “Modernization of technology intensive industries within the green growth framework”). 

Abstract. The paper attempts to consider comprehensively the emerging phenomenon of green financing and its major components. It is argued that these are a part of structural change within the existing global financial system; however, it would be too early to consider green finance an established subsystem of this system. Environmental and climate change have been producing a significant and ever increasing impact on the development pace and structure of both industrial and financial sectors of economy at the global, regional and national levels. Within this context the causes and substance of increasing devaluation of the fossil fuel assets’ issue and its significance to the economy of Russia are disclosed. As a major policy of handling this issue of stranded assets the development of renewable energy, energy efficient and clean technologies is emphasized and the issues of financing this green development path are considered in depth. Contemplated are different definitions of green finance with green investments making up a core. Critical analysis of interpretation of green finance as a new driver of the world economic development is provided. Traditional and innovative financial tools of green investment, in particular green bonds, Yieldcos, asset backed securities (ABS) are discussed. It is argued that so-called climate finance make up a major and ever more important component of the financial sector of the green economy. Climate finance makes a key and increasing contribution to the renewables projects’ development. Traditional loans supported by tax credits directly input to growing green investments while the new tools of debt financing and securities above stimulate financial flows into this new area providing risk hedging. It is argued that development of green finance as a major policy component within the new international climate treaty, Paris Agreement, should go hand in hand and be highly interconnected with implementation of the updated and expanded Sustainable Development Goals. If successfully achieved the output should make up a core element of the new global strategy and turn 2015 (when both documents were adopted) from a bifurcation to a turning point and stepping stone of the long-term sustainable development path.

Keywords: environmental issues, climate risks, stranded assets, green finance, climate finance, green investment, financial innovations, green bonds, ABS, Yieldco, carbon trading, carbon taxes, sustainable development 


1. Better Growth – Better Climate: The New Climate Economy Synthesis Report. The Global Commission on the Economy and Climate, Washington, World Resources Institute, 2014. 71 p.

2. Porfir'ev B.N. Izmeneniya klimata i ekonomika [Climate Change and Economics]. Vestnik RAN, 2011, no. 3, pp. 222-236.

3. Porfir'ev B.N. “Zelenaya” ekonomika: obshchemirovye tendentsii razvitiya i perspektivy [Green Economy: global trends and prospects]. Vestnik RAN, 2012, no.4, pp. 323-344.

4. Lindberg N. Definition of Green Finance. German Development Institute, April 2014. 3 p. Available at: (accessed 01.02.2016).

5. Porfir'ev B.N., Vladimirova I.L. Rol' “zelenogo stroitel'stva” v formirovanii sotsial'no orientirovannoi ekonomiki v mire i v Rossii [Role of Green Constraction in Forming People-oriented Economy over the World and in Russia]. Problemy teorii i praktiki upravleniya, 2015, no.6, pp. 8-19.

6. Porfir'ev B., Vladimirova I., Dmitriev A., Tsygankova A. Sistemy sertifikatsii po standartam “zelenogo stroitel'stva” v mire i v Rossii [Green Construction Certification Systems over the World and in Russia]. Standarty i kachestvo, 2015, no.10, pp. 26-31.

7. Henderson H., Sanquiche R., Nash T. Breakdowns Driving Breakthroughs: 2015 Green Transition Scoreboard® Report. Saint Augustine (FL), Ethical Markets Media, April 2015. 37 p. 

8. Climate Change: Implications for Investors and Financial Institutions. Key Findings from the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5). Cambridge (UK), University of Cambridge, Institutional Investors Group on Climate Change and UNEP Finance Initiative, 2014. 16 p.

9. Evans-Pritchard A. G20: Fossil Fuels Fears Could Hammer Global Financial System. Telegraph, 29 April 2015. Available at: G20-to-probe-carbon-bubble-risk-to-global-financial-system.html (accessed 01.02.2016)

10. Zindler E., Locklin K. Mapping the Gap: The Road from Paris: Finance Paths to 2°C Future. New York, CERES, Bloomberg New Energy Finance, 27 January 2016. 36 p.

11. Delivering the Green Economy through Financial Policy. Technical Paper. Frankfurt School of Finance & Management, UNEP Collaborating Centre for Climate & Sustainable Energy Finance, March 2014. Available at: unep-financial-policy.pdf (accessed 01.02.2016).

12. Reading Between the Lines of the Paris Climate Agreement. Available at: (accessed 01.02.2016). 

13. Sir David King: Paris Agreement on Climate Change: What’s Next? Clifford Chance, February 2016. Available at: (accessed 01.02.2016).

14. Porfir'ev B.N. Ekonomicheskii krizis: problemy upravleniya i zadachi innovatsionnogo razvitiya [Economic Crisis: Management Issues and Directions of Innovative Development]. Problemy prognozirovaniya, 2010, no.5, pp. 20-26.

15. Mills L., Byrne J. Clean Energy Investment: Q4 2015 Factpack. New York, Bloomberg New Energy Finance, 2015. 37 p.

16. Runyon J. Renewable Energy Finance Outlook 2016: the Year of the Green Dollar. Renewable Energy World Magazine: 2016 Market Outlook and Global Company and Product Directory, 2016 (January–February), vol. 19, issue 1, pp. 65-69.

17. Simm I. For Investors, Climate Change Is Now a Risk, not an Uncertainty. Available at: (accessed 27.04.2015).

18. Paun A., Knight Z., Wai-Shin Chan. Stranded Assets: What Next? HSBC Bank plc, 16 April 2015. Available at: what_next.pdf (accessed 10.02.2016)

19. Infographic: Stranded Assets Risk at a Glance. 04.01.2016. Available at: (accessed 01.02.2016).

20. Pre-FID 2016: US$380bn of capex deferred. Available at: (14.01.2016). (accessed 01.02.2016).

21. Howard A. A Beginners Guide to Fossil Fuel-Divestment. Available at: (accessed 01.02.2016).

22. Mirkin Ya.M. Finansovoe budushchee Rossii: ekstremumy, bumy, sistemnye riski [Russia’s Financial Future: Extremums, Booms and Systemic Risks]. Moscow, Knorus, 2011. 496 p.

23. Doomsday. The Economist, 03.10.2015, p. 54.

24. Emissions Trading Worldwide: International Carbon Action (ICAP) Status Report 2016. Berlin, International Carbon Action Partnership (ICAP), 2016. 72 p.

25. World Bank. Carbon Pricing Watch 2015. Washington, World Bank, 2015. 12 p. DOI:10.1596/978-1-4648-0268-3. 

26. Reuters, 2015. Available at: _source= Trackers&utm_campaign=543a49f1da-Newsletter_Issue_96_1_10_1_2015&utm _medium=email&utm_term=0_47c214f170-543a49f1da-49394653&mc_cid=543a49f1da&mc _eid=9f0854abf2 (accessed 01.02.2016).

27. The Economist, 26.03.2016, p. 81.

28. REN21: Renewables 2015 Global Status Report. Available at: (accessed 04.07.2015).

29. The Economist, 05.12.2015, p. 64.

30. Porfir'ev B.N., Roginko S.A. Energetika na vozobnovlyaemykh istochnikakh: problemy i perspektivy v mire i v Rossiib [Renewables: Global and National Issues and Prospects]. Perspektivy razvitiya VIE: vyzovy dlya Rossii [Prospects for the Development of RES: Challenges for Russia], Moscow, INP RAN, 2015, pp. 9-31.

31. Low Carbon Technology Partnerships Initiative (LCTPi): Scaling Up Renewables. New York, World Business Council for Sustainable Development, 2015. 40 p.

32. Mapping Channels to Mobilize Institutional Investment in Sustainable Energy. Paris: OECD, 2014. Available at: (accessed 01.02.2016).

33. Martin K. Yield Cos Compared. Available at: (accessed 01.02.2016).

34. Konrad T. 10 Clean Energy Stocks for 2016. Available t: 2016/01/10-clean-energy-stocks-for-2016.html (accessed 01.02.2016).

35. Gardfors T., Vesely A. Deeper Capital Markets for Renewable Energy. Available at: (accessed 01.02.2016).

36. Hirtenstein A. EIB Links Green Bonds to Projects in Second Push for Climate. Available at: (accessed 01.02.2016).

37. The Financial System We Need: Aligning the Financial System with Sustainable Development: UNEP Inquiry Report. Nairobi: UNEP, October 2015. 112 p.

38. Yieldcos Seen Surging to $100 Billion to Lower Clean Power Costs. Available at: (accessed 15.04.2015).

39. Year 2014 Green Bonds Final Report. New York: Initiative “Climate Bonds”, 2015. Available at: (accessed 15.04.2015).

40. Olsen-Rong T. Bonds and Climate Change – The State of the Market in 2015. New York: Initiative “Climate Bonds”, July 2015. 16 p.

41. Ross U. How to Help the Green Bond Market Grow. Comment. Available at: (accessed 27.07.2015).

42. Green Grow the Markets. The Economist, 05.07.2014, pp. 65-66.

43. Farid M., Keen M., Papaioannou M., Parry I., Pattillo C., Ter-Martirosyan A. et al. After Paris: Fiscal, Macroeconomic, and Financial Implications of Climate Change. IMF Stuff Discussion Note. SDN/16/01, January 2016. 46 p.

44. Huang C. From Green Bonds to Green Boom what Chinas New Green Bond Rules Mean for Sustainable Investment. Available at: (accessed 11.01.2016).

45. Buchner B., Trabacchi C., Mazza F., Abramskiehn D., Wang D. Global Landscape of Climate Finance 2015: A Climate Policy Initiative Report. November 2015. Available at: (accessed 11.01.2016).

46. Mainstreaming Climate Compatible Development (2015). Available at: (accessed 01.02.2016).

47. Summary of Transactions. Green Investment Bank. Available at: (accessed 30.03.2016).

48. Review of the Legislation Policy and Measures to Enhance the Energy Efficiency and Renewable Energy in EC. Intermediate Report. TACIS Regional Program of 2006 Contract TACIS/2006/137601. Brussels, 2009. (In Russ.)

49. Vasil'ev I.A., Koroleva T.S., Romanyuk B.D., Kornyl'eva Yu.A, Shinkevich S.V., Zakharov G.V., Vasil'ev O.I. Zarubezhnyi opyt stimulirovaniya ispol'zovaniya vozobnovlyaemykh drevesnykh istochnikov energii. Trudy NII lesnogo khozyaistva [Foreign Practices of Stimulating and Utilizing Renewable Wood Energy Resources. Works of NII of forestry], Saint-Petersburg, NIILKh, 2013. Available at: (accessed 11.01.2016).

50. Brown L., Larsen J., Roney M., Adams E. The Great Transition: Shifting from Fossil Fuels to Solar and Wind Energy. New York, London, WW Norton and Co, 2015. 178 p.

51. Ranyon J. Making Sense of the Tax Credit Extensions for Wind, Solar (and Bioenergy, Too). Available at: (accessed 16.12.2015).

Registered in System SCIENCE INDEX

For citation:
Porfirev B. Green Trends in the Global Financial System. World Eonomy and International Relations, 2016, vol. 60, no. 9, pp. 5-16.

Comments (0)

No comments

Add comment






Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies


Current Issue
2024, vol. 68, No. 5
Topical Themes of the Issue:
  • Are There Any Ways to Break Through the Korean Nuclear Impasse?
  • Contemporary U.S. Taiwan Policy: Balancing on the Edge
  • The Gulf Monarchies’ Vision of the Global Order Transformations and the Russian Place in It
  • At Post-Soviet Space
Submit an Article
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.