Sustainable finance

Green Finance

Meaning statusEstablishedSource recordDirect document linkedWhy these are different

Definition

Green finance comprises all forms of investment or lending that consider environmental effect and enhance environmental sustainability — the definition used in G20 green finance work. It spans instruments (green bonds, green loans, green funds), institutions, and policies that redirect capital from brown to green activities, and extends to how the financial system identifies and manages physical, transition, and liability risks arising from climate change and environmental degradation.

References

Global Solutions InitiativeFostering Sustainable Global Growth Through Green Finance (G20 context: green finance = all forms of investment or lending that consider environmental effect and enhance environmental sustainability; physical, transition, liability risks)

definition and risk taxonomy

Overview

What it means

Green finance has two jobs: financing the transition (mobilising capital for clean energy, efficiency, nature) and greening the financial system (embedding environmental risk in banking, markets, and insurance so that prices reflect reality). The first is about products; the second is about rules, disclosure, and supervision.

How it is used

The term frames national green finance strategies, taxonomies defining what counts as green, central-bank climate work (NGFS), and corporate sustainability-linked financing.

Why it matters

The transition is capital-intensive; green finance is the agenda for moving money at the required scale and speed without destabilising the financial system. **Note:** 1273 Green investment merges into this entry as the asset-allocation activity within the broader category.