Environmental sustainability is quick changing into a precedence for customers, companies, and governments. In truth, Forrester believes that we’re within the early phases of a green market revolution — a historic enterprise alternative, on par with the primary and second industrial revolutions.
In response, main monetary providers companies throughout banking, funding, and insurance coverage have launched an array of inexperienced finance merchandise and experiences to contribute to local weather change targets. The sector is awash with inexperienced finance choices! It’s tempting to leap on the bandwagon of green finance products and experiences, however the path to success isn’t simple or simple, particularly contemplating the danger of greenwashing or a lukewarm market.
So the place do you have to begin? Before everything, outline what success means to you as a agency: Is it market adoption, environmental influence, or your individual progress towards climate-related targets?
Take a cautious however open-minded method to your inexperienced finance technique, and align that technique to the relative maturity and influence of potential merchandise and experiences:
- Maturity. Understanding maturity will give your agency life like expectations of market provide and adoption in addition to potential for development. A mature services or products might be in excessive demand, however the marketplace for it might be saturated with competitors. As an illustration, inexperienced bonds have a protracted tenure (in the marketplace for 15 years), are in demand, and are ruled by well-established requirements such because the Local weather Bonds Initiative. This makes them extra mature than different inexperienced finance merchandise.
- Environmental sustainability influence. Finally, inexperienced finance ought to assist companies obtain their environmental sustainability targets. In any other case, companies threat having their initiatives labeled as pure greenwashing. This makes assessing the influence of inexperienced finance choices paramount. As an illustration, the influence of inexperienced company loans is excessive as a result of eligible corporations will create new climate-related applied sciences, equivalent to for waste administration, and might contribute to monetary providers companies’ inexperienced lending KPIs.
To grasp extra concerning the components that decide inexperienced finance merchandise’ and experiences’ degree of maturity and influence, dangers, and alternatives, in addition to the 4 paths that monetary providers companies can take, try my newest report, How To Prioritize Investments In Green Finance Products And Experiences.
