Green finances: Investments in climate protection

Green finances: Investments in climate protection

Investments in climate protection, also known as green finances, are a growing trend on the global financial markets. What was once regarded as a niche aspect of the financial industry has now become an important factor in the entire industry. As part of green finances, funds are invested in projects, companies and technologies that contribute to reducing and adapting to climate change.

What are green finances?

Green finances, also known as sustainable finances, relate to financial investments that flow into sustainable shops and projects. They aim to promote economic activities that have a positive impact on the environment and society. This can be done by investing in renewable energies, sustainable agriculture and green technologies.

The difference to traditional investments

In contrast to traditional investments, green finances differ by not only generating a financial yield, but also making a positive contribution to the environment and society. Traditional investment strategies usually only consider the financial profit, while green finances also take into account the ecological and social effects.

growth of the green finances

Not only the increased awareness of climate change, but also the increasing interest of investors in sustainable investment opportunities has led to a booming market for green finances in recent years. According to a report by the Global Sustainable Investment Review of 2018, the worldwide assets with sustainability reference was $ 30.7 trillion, an increase of 34% compared to 2016.

Green bonds

Green bonds are a special form of green financing. Green bonds are fixed -income securities that are specially issued for financing or refinancing projects with environmental benefit. According to the Climate Bonds Initiative Report 2019, the volume of the global green bond edition in 2019 rose to $ 258 billion, an increase of 51% compared to 2018.

advantages of green investments

Financial advantages

In addition to the obvious environmental and social advantages, green finances can also offer considerable financial advantages. Many sustainable companies and projects provide a stable and often above -average financial yield. In addition, the increased orientation towards sustainability is increasingly accompanied by regulatory requirements. Companies that invest in sustainable projects can thus alleviate potential regulatory risks.

risk reduction

In addition, the use of green finances typically reduces portfolio risks by avoiding investments in companies that may be affected by environmental disasters, regulatory sanctions or social unrest.

challenges for green finances

Despite the strong growth and the positive effects, the green finances are also faced with challenges.

lack of norms and transparency

In the Green Finance industry, there is often a lack of standards and transparency. This can make it difficult to define what a "green" or "sustainable" investment actually constitutes and also makes it difficult to compare investments.

Greenwashing

Another problem is so -called greenwashing. This is the attempt by companies to present their products or services as more environmentally friendly than they actually are. This can lead to investors to invest in projects that actually do not correspond to the sustainability standards they target.

FAZIT

Green finances play an important role in combating climate change and promoting sustainable development. While the field is still confronted with challenges, it remains an important and growing sector of the global financial landscape. It is the responsibility of regulatory authorities, investors and companies to ensure that the green finances can develop their full potential to promote a sustainable and just world.

In a world that has to become more sustainable and environmentally friendly to make up climate change, green finances will become increasingly important. The investment in renewable energies, the development of sustainable technologies and projects that deal with climate change are vital. It is time that we all - as individual investors, institutional investors or governments - make our finances greener.