Customers started committed to reduce the carbon footprint to zero and financial institution declare to fund only green investments. It can create the significant capital reallocation from assets characterized by carbon emissions to projects emitting minimal or even zero GHG volumes. It is the confirmation of global trend of integration of finance and environmental protection, what is the after-effect of Paris Agreement and definition of climate targets. This issue was confirmed during COP-26 in Glasgow. Sustainable financial system creates and valuates financial instruments during concluding transactions in order to meet long-term needs of society, shaping real and sustainable welfare. Climate-friendly investments are prioritized over the unsuitable capital spending. Power companies must begin to operate in green financial markets in order to raise capital for necessary investments adjusting their operating activity to green transition worldwide. The green finance promote the long-term investments supporting the climate targets and responding on climate risk. Green finance ensures financing in all financial sectors and asset classes that take into account environmental, social and investment decision management criteria, considering their climate risk, and are executed to promote sustainable development. Green finance funds the development based on renewables energy sources using both direct capital investments in RES investments and power purchase agreements (PPA) – physical PPA; virtual PPA, being the financial instrument. Other financial instruments connected with sustainable development that attract investors worldwide are green bonds, green loans and ESG-linked credits, green credits, sustainability-linked derivatives, Credit Default Swaps (CDS) connected with ESG, contracts related to ESG stock indices, derivatives concerning European Union Emission Allowances (EUA) trade, derivatives whose underlying asset are renewable fuels and weather derivatives.
Brak komentarzy:
Prześlij komentarz