Challenges to Green Finance in G20 Countries

3777
DOI: 10.20542/0131-2227-2017-61-10-16-24

O. Bogacheva (bogacheva@nifi.ru),
Financial Research Institute, 3/2, Nastasinskiy Per., Moscow, 127006, Russian Federation;
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation;
O. Smorodinov (osmorodinov@nifi.ru),
Financial Research Institute, 3/2, Nastas’inskii Per., Moscow, 127006, Russian Federation 

Acknowledgements. The article has been supported by the Ministry of Finance of the Russian Federation within a research project “Practical support for green financing (based on the G20 countries’ best practice)”.


Abstract. Financial support for transition to sustainable social and economic development is one of the major challenges for most of G20 countries. To complete this task, key stakeholders have to overcome multiple barriers. According to international experts, several challenges are recognized as top priorities. Without addressing them G20 countries might not succeed in bridging the increasing financial gap between the needs of green economy and currently available investment opportunities. Such challenges are analyzed in the article. Among them are: 1) absence of common definition of green finance and lack of international standards; 2) insufficient correlation of targets of sustainable growth with priorities of national investment policy; 3) absence of regulatory and legal framework directly related to green finance; 4) ecological externalities; 5) maturity mismatch; 6) poor green project selection and management; 7) information asymmetry at the capital markets; 8) lack of analytical tools and expertise in identification and assessment of green projects’ risks. The authors explain how each of the considered challenges hampers realization of green financing potential and analyze the best practice in addressing them. It is stated that solution of the abovementioned problems requires strong support from the governments of the G20 countries. At present, these countries implement such measures, as: introduction of appropriate regulatory and legal framework, stimulation of development market mechanisms and instruments of green financing (green bonds, credits, indices, etc.), formation of conditions aimed at elimination of asymmetry of information, fostering private-public partnership. Development of new international standards aligned with the requirements of sustainable growth and green financing is also under way in G20 countries. It is also noted that several challenges (namely, environmental externalities and green projects’ risk evaluation) require additional efforts from G20 countries, both at the national and global levels. 

Keywords: green financing, Group of Twenty (G20), investments, risk analysis, green bonds, sustainable development 


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For citation:
Bogacheva O., Smorodinov O. Challenges to Green Finance in G20 Countries. World Eonomy and International Relations, 2017, vol. 61, no. 10, pp. 16-24. https://doi.org/10.20542/0131-2227-2017-61-10-16-24



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