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Green Bonds and Sustainable Finance

<keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword> requires an investment support of USD 1.4 trillion — an average of USD 28 billion per year — to become a net-zero economy by 2070 and raising <keyword id="20260327" type="General" weightage="20" keywordseo="financial-resources" source="keywords">financial resources</keyword> for adaptation and mitigation action of this scale is an "unprecedented challenge", according to the <keyword id="20613906" type="General" weightage="20" keywordseo="Economic-Survey" source="keywords">Economic Survey</keyword> 2023-24 tabled in Parliament on Monday. Reaching net zero means achieving a balance between greenhouse gas emissions and the amount of these gases removed from the atmosphere by either natural processes, such as photosynthesis, or by other methods of carbon capture and storage. The consolidated report on the state of the economy in the previous year said India's climate action has been largely financed through domestic resources and the flow of international finance has been "very limited". Citing the Reserve Bank of India's (RBI) data, the report said bridging the "substantial funding gap" necessitates allocating 2.5 per cent of India's annual Gross Domestic Product (GDP) to <keyword id="20018880" type="General" weightage="20" keywordseo="green-finance" source="keywords">green finance</keyword>. "Preliminary estimates indicate that the aggregate investment support required by India to achieve its 2070 net-zero target will be USD 1.4 trillion at an average of USD 28 billion per year. Raising financial resources for <keyword id="19907392" type="General" weightage="20" keywordseo="climate-change" source="keywords">climate change</keyword> adaptation and mitigation actions of this scale is an unprecedented challenge," the document read. A 2022 report by the Climate Policy Initiative found that domestic sources accounted for the majority of green finance in India, at 87 per cent and 83 per cent in financial years 2019 and 2020 respectively. While international sources are increasing (from 13 per cent in FY 2019 to 17 per cent in FY 2020), the economic survey said they are still insufficient to meet India's net-zero target. "Mobilising substantial capital from traditional sources presents multifaceted challenges in emerging economies like India. The perceived sovereign risks associated with emerging market and developing economies (EMDEs) and the capital-intensive nature of such projects, coupled with lengthy gestation periods and evolving regulatory frameworks, can create misalignment between investor expectations and project timelines," the government said. The economic survey also noted that the flows of global capital to <keyword id="20200084" type="General" weightage="20" keywordseo="developing-countries" source="keywords">developing countries</keyword> have been impeded by high costs of capital. Despite securing a good rating on its green-bond framework, Indian sovereign <keyword id="20177085" type="General" weightage="20" keywordseo="green-bonds" source="keywords">green bonds</keyword> have hardly received any "greenium" from private investors. It is more a "wall of capital" than a "flood of capital" that is waiting to fund energy transition in EMDEs. It is just not mobile. All of these together have severely hampered the flow of finance for green-transition projects, the survey said. "Greenium" or green premium refers to the savings an issuer of a green bond realises on the associated coupon payment because the bond is green. Financial support to help middle-income and poor countries fight climate change will be at the centre of this year's UN climate conference in Baku, Azerbaijan, where the world will reach the deadline to agree on the New Collective Quantified Goal (NCQG) -- the new amount developed nations must mobilise every year starting 2025 to support climate action in developing countries. But achieving consensus will not be easy, given the disappointing progress made on major conflict points at the mid-year UN climate talks in Bonn, Germany. At the 2009 UN climate conference in Copenhagen, rich nations pledged to provide USD 100 billion annually from 2020 to help developing countries mitigate and adapt to climate change. However, delays in achieving this goal have eroded trust between developed and developing nations and have been a continual source of contention during annual climate negotiations. In May, the Organisation for Economic Cooperation and Development (OECD) claimed that developed countries had met the long-standing USD 100 billion-a-year promise by providing nearly USD 116 billion in <keyword id="20000757" type="General" weightage="20" keywordseo="climate-finance" source="keywords">climate finance</keyword> to developing countries in 2022, with nearly 70 per cent of the money given in the form of loans. However, international non-profit organisation Oxfam last week said climate finance provided by rich countries in 2022 totalled no more than USD 35 billion. Developing nations argue that they cannot be expected to reduce carbon dioxide (CO2) emissions faster if developed countries -- historically responsible for climate change -- do not provide enhanced financial support. Rich countries are now expected to raise more than USD 100 billion, with developing countries, including India, demanding trillions of dollars to tackle climate change.

Raising massive financial resources for net-zero goal unprecedented challenge: Economic Survey

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a><div type="image" title="Ana Carolina Oliveira, head of sustainable finance at ING" height="1800" width="2400" msid="90804570" hostid="261"></div><ul class="summary-list"><li>Companies and countries are turning to green bonds to finance projects and lower carbon emissions. </li><li>The increasingly popular debt product is poised to grow as the SEC demands greater transparency.</li></ul>The sale of green bonds — a form of debt that funds renewable-energy projects like wind or solar farms, for example — entered another stratosphere in 2021.Globally, green bonds raised a record $479 billion in proceeds last year, well ahead of the $245 billion sold in 2020, according to Refinitiv data. And bankers expect the asset class to continue smashing records as companies seek to lower their emissions."They are here to stay," said Anne van Riel, BNP Paribas' head of <keyword id="13301622" type="UNKNOWN" weightage="60" keywordseo="sustainable-finance" source="Orion">sustainable finance</keyword> capital markets for the Americas. "In the last two years we've seen a lot of interest in the S in <a href="https://www.businessinsider.com/how-companies-consider-governance-setting-esg-goals-2022-3">ESG</a>, but now the E is the focus of discussion."Countries such as India and Qatar are weighing their first-ever green bonds, while big companies like Apple have made them a part of annual capital-raising plans.Investors, too, are demanding more green, as they want exposure to companies charting a path toward a zero-carbon economy.These fund managers got some extra support from the Securities and Exchange Commission last month. The markets regulator drafted <a href="https://www.sec.gov/news/statement/gensler-climate-disclosure-20220321">a proposal</a> to ask public companies to divulge more information about their climate risks. It would force companies to provide more information, and greater transparency, to investors weighing a multitude of green financing.<h2>Preparing for green bonds</h2>But getting a company ready for a green bond takes time. It must have projects that are considered green — like renewable-power plants — and often companies must appoint third-party observers to certify their projects as green.Banks, too, must help companies establish a green-bond framework that outlines which projects are eligible for green proceeds and comply with principles outlined by entities like the International Capital Market Association or the Climate Bonds Initiative.It seems cumbersome, but it can put a company in a good position as big investors from BlackRock to Vanguard look to park their money with companies putting their best foot forward to mitigate climate risk.For example, the Portuguese utility Energias de Portugal raised a 1.25 billion-euro green bond in March to finance projects owned by its renewable-energy unit EDP Renováveis. Ana Carolina Oliveira, the head of sustainable finance at ING, told Insider that the demand for the bond was so great that at one point EDP obtained more than 4 billion euros in orders from investors.In circumstances like this, borrowers can leverage that investor demand to extract a cheaper interest rate on their green bond, which can make all the extra work worthwhile.<div type="image" title="Headshot of Anne van Riel, BNP Paribas' head of sustainable finance capital markets for the Americas" height="1800" width="2400" msid="90804571" hostid="261"></div>EDP was also prepared. It appointed Sustainalytics, which rates companies' ESG performance, to conduct an outside-party opinion on its renewables projects, and it picked ING to help compile EDP's green-bond framework."Companies that want to issue green bonds need to be ready, because there will be plenty of opportunities," Oliveira said. "You just need to have your framework and third-party opinions ready."More and more companies are getting ready. Refinitiv data indicates green-bond sales grew to $479 billion last year from $37 billion in 2015. And bankers say borrowers are saving 0.05% to 0.1% in interest payments if they go green."The demand for green bonds still outstrips the supply available, but hopefully not for much longer," Oliveira said. We're starting to see a more diverse group of sectors issuing these bonds and investors want to invest in companies that are fundamentally committed to change."

More companies are turning to green bonds to finance their projects. Here's how they work.

<ul class="summary-list"><li>The Federal Election Commission sent a warning to a political action committee connected to Rep. Marjorie Taylor Greene.</li><li>The FEC said the Save America Stop Socialism PAC made several errors in a recent financial report.</li></ul>A leadership political action committee led by Republican Rep. Marjorie Taylor Greene is under heightened scrutiny from federal officials because of what regulators say are financial discrepancies and an impermissible contribution.Greene's Save America Stop Socialism PAC made several errors in its amended financial report from July, including calculation mistakes and inconsistencies with the committee's reported cash on hand, according to an October 19 letter the Federal Election Commission sent Greene's PAC.The FEC also found that the Save America Stop Socialism PAC improperly sent $5,000 to help US House candidate J.R. Majewski's win his congressional primary election in Ohio.FEC officials said Greene sent the money to Majewski's campaign after the primary ended, in violation of federal rules. Majewski, who's faced questions about his <a href="https://www.businessinsider.com/trump-endorsed-jr-majewski-reveals-personal-finances-after-ignoring-disclosure-law-2022-8">financial transparency</a> and <a href="https://www.businessinsider.com/house-candidate-jr-majewski-lied-about-parts-of-his-military-service-2022-9">military service record</a>, now faces Democratic Rep. Marcy Kaptur in one of the nation's tightest House races in November.Greene's congressional office and the PAC's treasurer and custodian of records did not immediately respond to Insider's request for comment.As of September 30, Greene's PAC reported having about $135,000 in available cash.The Save America Stop Socialism PAC has until November 23 to respond to the FEC's letter — the commission signaled it would not grant the political action committee an extension if needed. If the PAC fails to respond in time, the FEC noted it could result in an "enforcement action" or an audit.It's not uncommon for the FEC to send warning letters to political committees that raise and spend large amounts of money and make the occasional accounting error. The commission, for example, sent a <a href="https://www.businessinsider.com/donald-trump-money-political-committee-fec-federal-election-commission-2022-7">warning to President Donald Trump's Make America Great Again PAC</a> in July for making similar accounting mistakes.But federal political committees are legally responsible for keeping their financial books clean. Significant errors or apparent violations of federal rules and lead to federal audits and fines, and in extreme cases, referrals to the Department of Justice for criminal investigation. The Save America Stop Socialism PAC political action committee is one of several political committees tied to the congresswoman from Georgia and is separate from Greene's campaign committee. Greene is expected to easily win re-election in November.

Marjorie Taylor Greene's PAC is violating campaign finance rules: federal regulators

<ul class="summary-list"><li>Leaders are gathering at the COP28 climate conference in Dubai this month. </li><li>The path to financing the world's transition to green energy remains unclear. </li></ul>As world leaders, business, and community leaders all gather at the COP28 conference in Dubai this month, the path to reaching net-zero greenhouse gas emissions by 2050 is becoming clearer, mapped out with distinct milestones and tech-enabled solutions. However, how the world will finance this transition is not so apparent.The estimated $2 trillion currently being invested annually in the green transition is a long way from the $5-$7 trillion needed to trigger and sustain the next great sustainable revolution—a transformation from the current fossil fuel-centric model to a highly renewable, low-emissions system of production.Financing the green energy transition is a trillion-dollar question. The answers lie in the mobilization of new cost-reducing finance instruments that can significantly remove risk from green projects, identifying and dismantling asymmetrical cost structures between developed and developing countries, and unlocking fair and just mechanisms to transition away from fossil fuels.This is how we can mobilize private investment and help achieve economic growth and climate neutrality.The<a target="_blank" href="https://www.deloitte.com/global/en/issues/climate/financing-the-green-energy-transition.html?id=gx:2el:3or:4financing_the_green_energy_transition:5GC1000297:6abt:20231122::ftget_op_ed"> Deloitte Financing the Green Energy Transition</a> report outlines some core financial levers, starting with a fundamental financial principle: the riskier the project, the higher the cost of capital. Harnessing financial instruments is vital to unlocking private capital and the financing of green investment at the lowest cost.The report estimates that getting this right could ultimately reduce financing costs by around $50 trillion by 2050. So, what are the associated risks, and what steps can we take to mitigate them and, consequently, reduce financing costs?<h2>Reducing the risk of green projects</h2>Identifying the types of risk allows us to understand the scale of the problem but also the potential of the opportunity. Unreliable markets and buyers, political instability, and ambiguous climate policies all contribute to elevated financing costs for green projects.Developing economies, where about three-quarters of green investments should occur to meet net zero targets, face even greater challenges with stricter public budget constraints for energy transition projects.One potential solution to reduce the costs and create a level playing field among countries and regions is the adoption of blended and concessional finance—a loan made on more favorable terms than the borrower could obtain in the market.Blended finance can mitigate risk with different layers of repayment priority, protecting investors against losses if a project meets bottlenecks or faces financial difficulties.<a target="_blank" href="https://www.convergence.finance/api/file/2ce2789177a186bd8eff8c7f74a9971a:78c7e7b69148447be571f3ae09448613baf012665702a3b4e48d35fb6ba733e58f62f6049af156c4422927249d515810d4de82d1e2b054f2d1287eb8aad60d79ebaa77d9d1be927c906f27ee1d11c7c7c6b7fdfabeaf754d500a36cabe9f9db0a08e99781a084961923b50c6a75182a8756af2d9f5dc214a78ae88e7b43e7714c8f066b3900e46d7e3d1451932a4118b2c87faf6a74a3ecb6e3bab0f91539726">Concessional public financing</a> can have a multiplier effect. For example, US$1 of concessional public finance can mobilize more than US$4 commercial capital, more than half of which can come directly from private capital. Simultaneously, the creation of green product markets and financial markets can quickly reduce revenue risk with pricing confidence. Offtake contracts can enable buyers to find green products and sellers to secure buyers.<h2>Bridging the cost gap</h2>The cost gap between green and fossil fuel projects is significant but it can be bridged with several mechanisms. Upfront costs can be minimized with innovation through R&amp;D as well as investment subsidies. This makes new technology projects more bankable—i.e., their risk-return profile meets investors' criteria to mobilize sufficient capital—while helping to build up a skilled workforce.At the same time, carbon pricing can help internalize the cost to society and incentivize a reduction. Additionally, public revenue from carbon pricing can be redirected to climate-related initiatives. Doing so would transfer revenues from fossil assets to their green counterparts, helping ease the impact of stranded fossil assets and stranded jobs.It is overwhelmingly clear that the transformation ahead requires a rapid scale-up of investment with an alignment between governments, financial institutions, and investors to jointly develop and agree on mechanisms to foster bankability.This is particularly acute and relevant in developing countries where underinvestment directly correlates to the risk perception from private investors and could lead to missed opportunities given that developing countries are key to the success of the global clean energy transition.If we get this right, we can achieve our collective net zero objectives, at the lowest possible cost, through a just transition. In the end, the probability of this success equals the bankability of projects.<a target="_blank" href="https://www2.deloitte.com/us/en/profiles/JenniferSteinmann.html">Jennifer Steinmann</a> is Deloitte Global Sustainability &amp; Climate Practice Leader.<a target="_blank" href="https://www.deloitte.com/global/en/about/people/profiles.dc8c0bef.html">Pradeep Philip</a> is Lead Partner, Deloitte Access Economics.

As world leaders gather for COP28 one question looms - who will pay for the green transition?

<a href="https://www.businessinsider.com/category/deloitte-920"></a><div type="image" title="The sun sets on a field filled with solar panels and several wind turbines in China." height="2102" width="2803" msid="86458238" hostid="261"></div><ul class="summary-list"><li><keyword id="12160567" type="UNKNOWN" weightage="60" keywordseo="developing-countries" source="Orion">Developing countries</keyword> want to reduce carbon emissions but need funds for clean-energy infrastructure.</li><li>There are large gaps in capital, and the need is expected to grow to $300 billion by 2030.</li><li>In a panel discussion at <keyword id="12160303" type="UNKNOWN" weightage="60" keywordseo="climate-week" source="Orion">Climate Week</keyword> NYC, executives from Barings highlighted <a href="https://www.iea.org/reports/financing-clean-energy-transitions-in-emerging-and-developing-economies">financing challenges</a>.</li></ul>Developing countries are often at higher risk from the effects of the <keyword id="11896310" type="UNKNOWN" weightage="60" keywordseo="climate-crisis" source="Orion">climate crisis</keyword>, including flooding, drought, and extreme heat. For many governments and companies in these countries, the business of <keyword id="11896309" type="UNKNOWN" weightage="100" keywordseo="sustainability" source="Orion">sustainability</keyword> has become a major issue, with concerns about the high cost of decarbonization and the financing needed for the transition to cleaner energy sources.In a panel discussion at Climate Week NYC on Tuesday, several executives from the investment firm Barings highlighted the <a href="https://www.iea.org/reports/financing-clean-energy-transitions-in-emerging-and-developing-economies">financing challenges</a> for this green transition in many developing countries (also known as emerging markets or lower-income countries).A major issue is insufficient funding for large-scale adaptation projects aimed at reducing carbon and increasing renewable power generation. While the Paris agreement has <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/nationally-determined-contributions-ndcs/nationally-determined-contributions-ndcs">carbon-reduction commitments from countries</a>, it doesn't provide a plan or guidance for how to achieve them."We need more global coordination because it's difficult for them to face these shocks by themselves," said Kawtar Ed-Dahmani, Barings' managing director of emerging-markets debt. Developing countries that want to attract capital from private sources also don't have an organized framework to operate in, said Fergus McCormick, the director of sovereign research for the <a href="https://www.emia.org/">Emerging Markets Investors Alliance</a>.Some other factors that limit the interest for these green-transition infrastructure projects from private investors and financing issuers include a large amount of existing debt and a lack of standard measurement for how countries are mitigating and adapting to climate change. There is also the tension between the long-term horizon for installing a project and getting it running and the short-term window in which investors estimate the profitability of a loan or bond.Two nonprivate sources of financing are transfers from wealthy developed donor countries (known as bilateral funding) and loans and grants from developmental finance institutions like the World Bank or the International Monetary Fund (known as multilateral funding). But McCormick said these aren't enough, even with promises like <a href="https://www.un.org/sites/un2.un.org/files/100_billion_climate_finance_report.pdf">the $100 billion climate-finance commitment</a> from private and public sources."Developing countries received only $17 billion in 2018 compared to adaptation costs of $70 billion, and these costs are expected to grow to as much as $300 billion by 2030," he said during the panel, adding that while $80 billion was raised this year, there was still a $20 billion shortfall.One opportunity is the growing interest in "<a href="https://markets.businessinsider.com/news/stocks/fannie-mae-expanded-its-nearly-88-billion-green-bond-business-in-2020-adding-single-family-green-bonds-to-its-offerings-1030528503">green finance</a>." In addition to climate, <a href="https://markets.businessinsider.com/news/stocks/the-holy-grail-of-investments-the-green-bond-1030713337">green</a>, and <a href="https://www.businessinsider.com/sustainable-bonds-are-hot-but-investors-question-their-sincerity-2021-3">sustainable</a> bonds, green finance includes investments focused on environmental, social-impact, and governance factors, known as ESG. The business of sustainable assets is growing rapidly - the Global Sustainable Investment Alliance estimated that ESG investing grew to <a href="https://www.cnbc.com/2019/12/14/your-complete-guide-to-socially-responsible-investing.html">more than $30 trillion</a> in 2018.But when asked about these new lending products in helping fund the transition to lower-carbon economies, McCormick was blunt in his assessment of the <a href="https://news.yahoo.com/thinking-investing-green-fund-many-145128570.html">lack of enforcement</a> for their claims. "The impact, the actual effectiveness of these bonds, has been absolutely minimal," he said. "It's been a huge amount of disappointment and greenwashing."There's also a concern that developing countries aren't getting enough access to these new bonds and increasingly popular ESG funds because of low scores in one or more assessment areas. "Are we doing enough to open the market to allow emerging markets to access this pool of money, or is this a framework being set up by developed markets for developed markets that excludes emerging markets?" said Omotunde Lawal, the head of emerging-markets corporate debt at Barings. "Should we be pushing for more transition bonds?"Ultimately, the nature of carbon emissions and how the global economy functions mean funding for clean-energy infrastructure in developing countries will only become a bigger topic for investors and developed nations. El-Dahmani said that beyond the moral imperative for rich countries to assist poorer ones, issues like global insecurity, migration, and shocks to commodities and the supply chain affect everyone.

Developing companies seeking to transition to clean energy can't get enough money

The government has proposed that 100 critical transport infrastructure projects, for last and first-mile connectivity identified in ports, coal, steel, fertilizer and food grain sectors. Presenting the Union <keyword id="6358021" type="General" weightage="100" keywordseo="budget" source="Orion">Budget</keyword> for 2023-24 in Parliament, <keyword id="25455" type="General" weightage="80" keywordseo="finance" source="Orion">Finance</keyword> Minister <keyword id="129243" type="General" weightage="50" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> said these projects will be taken up on priority with an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources. <keyword id="679937" type="General" weightage="80" keywordseo="sitharaman" source="Orion">Sitharaman</keyword> proposed hiking the capital expenditure outlay by 33 per cent to Rs 10 lakh crore for infrastructure development for 2023-24 and will be at 3.3 per cent of the GDP. Presenting the Budget for 2023-24, she said the newly established infrastructure finance secretariat will assist in attracting more private investment. She said that this will be almost three times the outlay in 2019-20. The 'Effective Capital Expenditure' of the Centre is budgeted at Rs 13.7 lakh crore, which will be 4.5 per cent of GDP. For civil aviation, the finance minister said that 50 additional airports, heliports, water aerodromes and advanced landing grounds will be revived for improving regional air connectivity. Further, as part of its green growth strategy, which is among the seven priorities of the Budget, Sitharaman said the government has been implementing many programmes for green fuel, green energy, green farming, green mobility, green buildings, and green equipment, and policies for efficient use of energy across various economic sectors. "These green growth efforts help in reducing carbon intensity of the economy and provides for largescale green job opportunities," the Finance Minister said. "India is moving forward firmly for the 'panchamrit' and net-zero carbon emission by 2070 to usher in green industrial and economic transition. This Budget builds on our focus on green growth," she said. Union Finance Minister announced that the government proposes to increase capital expenditure outlay by 33 per cent to Rs 10 lakh crore in 2023-24, which would be 3.3 per cent of the GDP. "(This overall outlay) would be 3.3 per cent of GDP, almost three times the outlay made in 2019-20. With the substantial increase, it is central to the government's efforts to enhance growth potential and job creation, the crowd in private investments and provides a cushion against global headwinds," Sitharaman said in her Budget speech. This year's budget is significant being the last full budget of the <keyword id="6354477" type="General" weightage="50" keywordseo="narendra-modi" source="Orion">Narendra Modi</keyword> government's second tenure as the general elections are scheduled for next year. Presenting the Union Budget in Parliament today, Finance Minister Sitharaman pegged the fiscal deficit target for 2023-24 at 5.9 per cent of gross domestic product (GDP). In 2022-23, the government pegged fiscal deficit at 6.4 per cent. The Finance Minister further said that the government intends to bring the fiscal deficit below 4.5 per cent of GDP by the financial year 2025-26. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/budget-2023-fully-imported-cars-including-evs-to-cost-more/articleshow/97522899.cms">Budget 2023: Fully imported cars, including EVs, to cost more</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/budget-will-fulfil-dreams-of-aspirational-society-farmers-and-middle-class-pm-modi/articleshow/97522670.cms">Budget will fulfil dreams of aspirational society, farmers and middle class: PM Modi</a>

Budget 2023: Govt proposes 100 critical projects for last-mile logistics at ₹75,000 crore

<ul class="summary-list"><li>The <keyword id="84979" type="ORGANIZATION" weightage="60" keywordseo="European-Central-Bank">European Central Bank</keyword> stepped up its focus on <keyword id="6361617" type="UNKNOWN" weightage="60" keywordseo="climate-change">climate change</keyword> on Monday.</li><li>It will invest in a green bond fund and create a dedicated "climate center".</li><li>UK lawmakers pressured the <keyword id="106488" type="CITY" weightage="60" keywordseo="Bank-of-England">Bank of England</keyword> over its support for polluters.</li></ul>The European Central Bank stepped up its focus on climate change on Monday, announcing that it will create a specialist team to look into the issue and start investing in a "green bond" fund.It comes as central banks face growing scrutiny over their investments, with a group of British lawmakers on Monday calling on the Bank of England to stop funding polluters through its bond-buying programs.Central banks have increased their attention to climate change in recent years. Many are now members of the Network for Greening the Financial System, which aims to manage the risk of climate change through financial systems.But central banks have loaned billions of dollars to polluters including oil and chemicals companies during the pandemic through various schemes designed to prop up economies, drawing the ire of climate campaigners.Read More: <a href="https://www.businessinsider.com/stock-picks-to-buy-small-companies-value-names-recovery-bofa-2021-1" target="_blank" rel="noopener noreferrer">BANK OF AMERICA: Buy these 31 unheralded stocks as the recovery's hottest trades of recent months continue to gain strength in 2021</a>Today, <keyword id="60971" type="CITY" weightage="60" keywordseo="ECB">ECB</keyword> president Christine Lagarde signalled a renewed focus on climate change. <a href="https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210125~f87e826ca5.en.html">She said</a> the ECB would create "a new climate change center to bring together more efficiently the different expertise and strands of work on climate across the Bank".It followed an <a href="https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.pr210125~715adb4e2b.en.html">earlier announcement</a> from the ECB that it would use part of its own funds to invest in a euro-denominated green bond investment fund. The fund was established by the Bank for International Settlements, an international organization owned by central banks.The BIS fund invests in bonds that support renewable energy production, energy efficiency and other environmentally-friendly projects.Yet campaigners said the ECB needed to go further, in particular by reconsidering the bonds it buys through its €1.85 trillion ($2.24 trillion) coronavirus asset-purchase program.Paul Schreiber of campaign group Reclaim Finance said the ECB is "trying to use the purchase of <keyword id="2772268" type="PERSON" weightage="60" keywordseo="Green-bonds">green bonds</keyword> to distract from its support for fossil fuels". A Reclaim Finance <a href="https://reclaimfinance.org/site/en/2020/05/17/quantitative-easing-climate-the-ecbs-dirty-secret/">study from May 2020</a> found that the ECB finances 38 corporations active in fossil fuels.In the UK, a group of lawmakers on Monday <a href="https://twitter.com/CommonsEAC/status/1353613828429254657?s=20">made similar points</a> about the Bank of England's bond-buying, saying the BoE should limit its support to companies in "high-carbon sectors". It comes as the UK prepares to host the UN climate summit known as COP26 in November.Read More: <a href="https://www.businessinsider.com/stock-market-crash-expert-warns-70-percent-drop-sp500-indicator-2021-1" target="_blank" rel="noopener noreferrer">A notorious market bear who called the dot-com bubble says he sees 'fresh deterioration' in the market indicator that first signaled the 1929 and 1987 crashes - and warns that stocks are ripe for a 70% drop</a>The Environmental Audit Committee, which scrutinizes public bodies over climate change, wrote to BoE governor Andrew Bailey, saying: "The Bank must begin a process of aligning its corporate bond purchasing programme with <a href="https://www.businessinsider.com/biden-rejoins-paris-climate-accord-and-who-revokes-muslim-ban-2021-1">Paris Agreement</a> goals as a matter of urgency." The Paris Agreement between governments pledges to limit the rise in global temperatures to 2C (3.6F).A Bank of England spokesperson said: "The Bank will respond in full to the Environmental Audit Committee letter in due course. "Climate change is a strategic priority for the Bank. We have an ambitious work programme on climate change, from the stress testing of the largest UK banks and insurers against climate-related financial risks through to working internationally with the central bank Network for Greening the Financial System - a network of which we were a founding member. "As the governor told the Treasury Select Committee in November, work to consider how best to take account of climate considerations in our corporate bond portfolio is already underway at the Bank."

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Green Bonds and Sustainable Finance

Raising massive financial resources for net-zero goal unprecedented challenge: Economic Survey

PTI

More companies are turning to green bonds to finance their projects. Here's how they work.

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Marjorie Taylor Greene's PAC is violating campaign finance rules: federal regulators

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As world leaders gather for COP28 one question looms - who will pay for the green transition?

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Developing companies seeking to transition to clean energy can't get enough money

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Budget 2023: Govt proposes 100 critical projects for last-mile logistics at ₹75,000 crore

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ECB pledges to buy green bonds as pressure rises on Bank of England over climate change

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