What Is Environmental Finance?

Environmental finance is a financial innovation carried out by the financial industry according to the needs of the environmental industry. It is an extension and sublimation of traditional finance.

Environmental finance

Right!

Environmental finance is a financial innovation carried out by the financial industry according to the needs of the environmental industry. It is an extension and sublimation of traditional finance.

Chinese name

Environmental finance

Types of

financial

Appear

American Traditional Dictionary

Definition

Environmental finance is part of the environmental economy

At present, the more commonly used interpretation of environmental finance is the American Traditional Dictionary: Environmental finance is part of the environmental economy. It mainly studies how to use a variety of financial tools to protect the environment and protect biodiversity. Environmental finance not only requires the financial industry to introduce the concept of environmental protection, to form a financial development model that is conducive to saving resources and reducing environmental pollution; it also emphasizes that the financial industry pays attention to pollution issues in the production process and human life, and provides corresponding financial services and Products to promote the development of environmental industries.

With the vigorous development of the global environmental protection industry, the interaction between the environmental protection industry and the financial market has created a new field of environmental finance. Environmental finance has become an effective means of optimizing the allocation of environmental protection resources, promoting the development of environmental protection industries and improving the efficiency of environmental protection enterprises. The implementation of environmental finance is of great significance to the development of a low-carbon economy and the construction of a harmonious society.

In recent years, the world economy is in a stage of sustained and rapid development. The process of urbanization and industrialization is accelerating, and with it, environmental problems are becoming more and more serious. The deterioration of the environment has forced the economy and society to face severe challenges, affecting the sustainable and healthy development of various industries, and the financial industry is no exception. At the same time, global financial markets are undergoing changes from prosperity to crisis. The turbulence of financial markets has brought potential threats to the sustainable development of the global economy, and has also caused people to rethink the financial development model. In 1992, the promulgation of Agenda 21, a global programmatic document for sustainable development, brought hope and dawn to the healthy development of the financial industry. In the same year, at the United Nations Conference on Environment and Development, the United Nations Environment Programme officially launched the "Statement on Environmentally Sustainable Development in the Banking Community", which received positive responses from over 100 institutions and groups. These changes have gradually brewed more and more interaction between the financial market and the environmental protection industry, and point out the direction for the expansion of the environmental protection industry and the financial industry in the new situation.

In foreign countries, the interactive practice of environmental protection industry and financial industry has been carried out. The practice of environmental finance began in the United States in the early 1980s with the "Super Fund Act", which requires companies to be responsible for the environmental pollution they cause, so that credit banks pay great attention to and prevent credit risks caused by potential environmental pollution. Subsequently, the governments and international organizations of the United Kingdom, Japan, the European Union and other countries have conducted various attempts and explorations and accumulated some experience. For example, in 1991, the Bank of America changed its loan procedures based on avoiding environmental debt risks, the environmental assessment policy of the US Export-Import Bank, the environmental risk rating of the British Financial Innovation Research Centre, and the Japanese credit support policy to promote the development of energy-saving technologies. Ten major banks in seven countries announced the implementation of the "Equator Principles", which for the first time established minimum environmental and social industry standards for international project financing, which has greatly promoted the innovation of environmental finance.

The development of the financial market depends on the sustainable development of the economy. It takes the sustainable development of the economy as the cornerstone of its own development. In 1994, our government established sustainable development as our basic national policy. Therefore, implementing the basic national policy of environmental protection and taking the road of sustainable development is already an established development strategy for our country, a fundamental guarantee for China's modernization, and the basis for the prosperity of the financial industry. At the same time, as special enterprises, financial institutions in the capital market must also consider the risks and benefits of their operations. Environmental risks have been increasingly valued by financial companies.

At present, under the guidance of national policies, China's financial industry has begun to change its concept and transition to "environment-friendly", and the concept of environmental finance has gradually been upgraded to the operational level. In 1995, the People's Bank of China and the State Environmental Protection Administration successively promulgated the "Notice of the People's Bank of China on the Implementation of Credit Policies and the Strengthening of Environmental Protection Work" and the "Notice of the National Environmental Protection Agency on the Use of Credit Policies to Promote Environmental Protection Work". Banks are getting involved in environmental protection. Since 2007, the State Environmental Protection Administration, together with the China Banking Regulatory Commission, the China Insurance Regulatory Commission, and the China Securities Regulatory Commission, have continuously launched the "New Environmental Protection Policy", and successively introduced "green credit", "green insurance" and "green securities" products, setting off an "environmental finance" storm in China At the same time, it also points out the future development direction for the close connection between the environmental protection industry and the financial market.

In the past two years, China's environmental protection industry has been supported by the government, and the research and development of environmental protection technology and equipment has made rapid progress, and some product technologies have reached the international leading level. In terms of capital markets, with the gradual opening up of China's financial markets to the outside world, the financial system has continued to improve. China has introduced a large number of advanced financial technologies, and at the same time continued to carry out financial innovation, increase the variety of financial services, and improve service quality. Financial instruments and financial instruments have become more diversified, financial risk control capabilities have been continuously improved, and the combination of finance and other industries has also achieved great success. This has supported and developed environmental financial innovation based on the interaction between the environmental protection industry and the capital market.