Climate change: net-zero transition requires ‘mission-driven’ green banks to finance decarbonisation, industry body says

Name: China, climate change and El Nino: an emerging food, water and power crisis
Uploaded: 2023-10-10T08:30:19.000Z
Duration: 28 min 58 s
Description: China, climate change and El Nino: an emerging food, water and power crisis

Financial sector has an instrumental role to play in mobilising capital for the net-zero transition, according to the Alliance for Green Commercial Banks

‘Collectively, efforts by financial institutions will contribute to the broader economy’s transition,’ monetary authority official says

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A Hong Kong’s Central district is seen from the Roof Garden on top of the M+ podium in West Kowloon Cultural District on August 18, 2023. Photo: Sam Tsang

Martin Choi

Published: 4:30pm, 10 Oct 2023

The financial sector must not only divest from carbon-intensive industries, but also make it its mission to provide the capital to help clients decarbonise and transition to a net-zero economy, according to the Alliance for Green Commercial Banks.

The net-zero transition has created new business opportunities and financing needs, and these new market conditions have encouraged banks to reshape their approach to structuring sustainable financing products for clients as well as investors, according to the Defining an Ambitious Climate Strategy of Green Banking thought leadership paper, released on Tuesday.

The financial sector, as the enabler of global economies, will play an instrumental role in mobilising the capital needed for this inevitable transition, according to the paper, launched by the alliance in partnership with Credit Agricole Corporate and Investment Banking (CIB).

“It is not enough for us to divest and to not lend to carbon-intensive sectors,” Carmen Tsang, head of sustainable investment banking for Greater China at Credit Agricole CIB, said at the launch of the paper. “A green financial institution, a green bank, should also act as an enabler to help its clients to decarbonise and transition as well.”

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China, climate change and El Nino: an emerging food, water and power crisis

The Hong Kong Monetary Authority (HKMA) and International Finance Corporation (IFC) jointly launched the alliance in November 2020 with the aim of helping banks develop the solutions needed to address climate change across emerging markets.

The paper defined a “green bank” as a “a mission-driven financial institution that undertakes innovative financing to enable its clients to transition” towards their net-zero target and the Paris Agreement goal of limiting global temperature increases to 1.5 degrees Celsius above pre-industrial levels.