Green Finance Opportunities

Understanding Blue, Green, and Gold Carbon Credits & Global Trading Models As the world accelerates its net-zero transition, carbon credits have evolved to address different ecosystems and emission sources. But what are Blue, Green, and Gold Carbon Credits, and how are they traded globally? Types of Carbon Credits: 🔵 Blue Carbon Credits • Derived from coastal and marine ecosystems like mangroves, seagrass meadows, and salt marshes. • These ecosystems absorb and store large amounts of CO₂, making them crucial for climate mitigation. • Projects focus on restoration and conservation, backed by standards like Verra’s Blue Carbon Initiative. • Example: Indonesia’s Blue Carbon Project supporting mangrove restoration. 🌿 Green Carbon Credits • Linked to land-based natural ecosystems such as forests, grasslands, and regenerative agriculture. • Generated from reforestation, afforestation, and soil carbon sequestration projects. • Commonly traded in Voluntary Carbon Markets (VCMs) using standards like Gold Standard and Verified Carbon Standard (VCS). • Example: REDD+ (Reducing Emissions from Deforestation and Degradation) projects in the Amazon rainforest. 🏅 Gold Carbon Credits • Considered high-quality offsets with added social and environmental benefits beyond carbon reduction. • Often certified under premium standards such as Gold Standard and Climate, Community & Biodiversity (CCB) Standards. • Support biodiversity protection, water security, and community development. • Example: Cookstove projects in Africa, reducing deforestation while improving public health. Major Carbon Trading Models Worldwide: 🌍 Compliance Carbon Markets (CCMs) • Government-regulated cap-and-trade systems. • Companies must purchase allowances if they exceed emissions limits. • Key Examples: ✅ EU Emissions Trading System (EU ETS) – Largest and most established carbon market. ✅ China’s National ETS – The world’s biggest by volume. ✅ California Cap-and-Trade – A leading market in North America. 💡 Voluntary Carbon Markets (VCMs) • Companies buy offsets to neutralize their carbon footprint beyond legal requirements. • Key Platforms: ✅ Verra’s Verified Carbon Standard (VCS) – The largest voluntary carbon credit registry. ✅ Gold Standard – Ensures social and environmental co-benefits. ✅ American Carbon Registry (ACR) – Recognized for its rigorous methodology. Both compliance and voluntary markets play a vital role in driving global carbon finance and climate action. 🌱 Is your company leveraging these credits in its net-zero strategy? Let’s connect and discuss! #CarbonMarkets #Sustainability #NetZero #ClimateAction #BlueCarbon #GreenCarbon #GoldCarbon

A Practical Guide to 1.5 C Scenarios for Financial Users I'm incredibly proud of this comprehensive UN Environment Programme report and resource on climate scenarios! It was my final piece of work with United Nations Environment Programme Finance Initiative (UNEP FI) and one that was a major team effort and a multiyear process! We developed it to help financial users to understand the assumptions behind these critical scenarios and how they can be applied in financial decision-making from net-zero target-setting to risk management. It is full of analyses of different scenarios in comparison to each other, explorations of sector decarbonization pathways, and practical applications of scenario data and insights. It covers IPCC, NGFS, and International Energy Agency (IEA) scenarios and brings in data from a variety of sectors in order to show the changes needed to deliver a sustainable future. Have a look through it here: https://lnkd.in/d8G5eSae There really is something in here for everyone. We hope it becomes a valuable desk reference for you and your teams! #climate #netzero #decarbonization #climatescenarios #climatescience #IEA #NGFS #UN #IPCC #climatefinance #climaterisk

Alastair Marsh's recent thought-provoking piece in @Bloomberg highlights critical challenges with the current climate tech investing landscape Climate tech projects are capital-intensive with long timelines. Unlike software, much of climate tech requires massive upfront capital for R&D, pilot plants, and manufacturing before significant revenue. This demands longer development and deployment cycles (often 7+ years to scale) that exceed typical 5-7 year VC exit horizons. The classic VC model - built for rapid, asset-light scale-ups - often misaligns with the realities of many climate tech solutions, especially "hard tech." While there’s an abundance of early-stage VC capital for entrepreneurs, later-stage growth that bridges these projects from venture to infrastructure stage is basically absent—that’s called the missing middle. We need to adapt and supplement that approach by layering in other types of capital and bridge the "missing middle." A broader array of financing instruments is essential for climate tech to scale, including patient equity and growth capital, project finance, blended finance, and specialized debt models. Marsh’s piece lays out how family offices are uniquely positioned to be catalyzing players in this space. Their flexibility allows them to deploy capital across diverse segments, filling the gap and driving significant financial returns alongside impact. https://lnkd.in/gUf85Bwy

📊 Exciting new research from the European Central Bank (ECB) sheds light on how banks are pricing climate risk in their lending practices! 🌿 In their working paper, Carlo Altavilla, Miguel Boucinha, Marco Pagano, and Andrea Polo combine euro-area credit register data with carbon emission information to uncover fascinating insights into the intersection of finance and climate change. 🏦 The study finds that banks are indeed factoring climate risk into their lending decisions. Firms with higher carbon emissions face higher interest rates, while those committed to reducing emissions enjoy lower rates. Interestingly, banks that have publicly committed to decarbonization goals (through initiatives like Science Based Targets initiative) are even more aggressive in this pricing strategy. 💶 But here's where it gets really intriguing: the researchers uncovered a "climate risk-taking channel" of monetary policy. When the ECB tightens monetary policy, banks not only increase their overall credit risk premiums but also amplify their climate risk premiums. This means that during periods of monetary tightening, high-emission firms face a double whammy of increased borrowing costs and reduced access to credit compared to their greener counterparts. The authors argue that while restrictive monetary policy may slow down overall decarbonization efforts, it inadvertently creates a more favourable environment for low-emission firms and those committed to going green. 🌍 These findings are crucial for understanding how the financial sector is adapting to climate change and how monetary policy interacts with climate-related financial risks. It's also clear that the greening of finance is not just a trend, but a fundamental shift in how risk is assessed and priced in our economy. #ClimateFinance #SustainableBanking #MonetaryPolicy #ECB #GreenEconomy #ClimateRisk

Building ESG: A Driving Force for Positive Change ________________________________________ Environmental, Social, and Governance (ESG) principles have emerged as a powerful catalyst for positive change, transforming businesses and shaping a more sustainable and equitable future. ESG's Growing Momentum * ESG investing has experienced exponential growth, with assets under management reaching a staggering $35 trillion in 2022. * A study by MSCI revealed that companies with strong ESG ratings outperformed their peers by an average of 7.6% over the past 10 years, demonstrating the link between ESG integration and superior financial performance. ESG's Impact on Environmental Stewardship * Companies prioritizing environmental sustainability are reducing their carbon footprint by an average of 11%, according to a study by the Carbon Disclosure Project (CDP). * This commitment to environmental stewardship is crucial in mitigating climate change and preserving natural resources for future generations. ESG's Contribution to Social Responsibility * Companies embracing social responsibility are fostering ethical labor practices, ensuring diversity and inclusion, and contributing to community development, leading to a 20% higher likelihood of retaining top talent, as found by a Deloitte study. * Strong social responsibility initiatives enhance employee engagement, productivity, and brand reputation. ESG's Role in Corporate Governance * Companies upholding good corporate governance principles promote transparency, accountability, and ethical leadership, reducing the risk of financial fraud by 30%, as indicated by a study by the Governance & Accountability Institute. * Effective corporate governance fosters trust among investors, customers, and stakeholders, solidifying a company's long-term success. **ESG: A Collective Journey Towards Sustainability** Transitioning to a sustainable and equitable world requires a collaborative effort from businesses, investors, governments, and civil society. ESG provides a shared framework for collective action, enabling all stakeholders to contribute to a brighter future. ESG is not just a passing trend; it represents a fundamental shift in business practices and value creation. By embracing ESG principles, companies can not only enhance their financial performance but also contribute to a more sustainable, equitable, and prosperous world for all. Please feel free to comment your view and please feel free to share the article (Disclaimer: Views are personal, should not be related to organisations view) #buildingEsg #circulareconomy #sustainablefinance #esgreporting #esgstrategy #esgrisk #climaterisk #climatechangeaction #climaterisks #india #emissions #esgratings #esg #cop28 #greenertogether #SDGs #sustainability #business #csr

Financial Value of Climate Risks and Opportunities 🌍 Companies are under increasing pressure to reflect climate risks and opportunities in financial decision making. This is essential for embedding sustainability into strategy and unlocking measurable business value. ERM highlights that financial valuation of environmental and social factors enables companies to align investment decisions with long term performance. Value is created through energy efficiency, circular models, responsible sourcing, and workforce inclusion. These actions contribute to resilience, innovation, and cost efficiency. Sustainable products are experiencing significantly higher growth rates than conventional alternatives. Efficiency measures can reduce operating costs by up to 30 percent, while green finance instruments can lower the cost of capital. These gains can be captured directly in financial models and forecasts. At the same time, climate related risks are increasing in scale and frequency. Physical risks already account for over 270 billion dollars in annual damages. Transition risks may result in stranded assets worth hundreds of billions. The broader economic cost of unmitigated climate change could reduce global GDP by up to 18 percent by mid century. ERM presents two complementary approaches. Value creation focuses on capturing upside through efficiency, innovation, and market expansion. Risk mitigation addresses downside exposure by incorporating climate risks into business planning and decision processes. Both require integration of ESG into financial structures. This means applying standard financial tools such as internal rate of return and discounted cash flow to evaluate climate related actions. It also involves including environmental risks in sensitivity testing, pricing models, and capital planning frameworks. Translating these impacts into financial terms enables clearer comparison and stronger governance. Capital markets are moving toward companies that manage climate exposure effectively. Lower financing costs, stronger investor confidence, and increased access to sustainability linked capital are all benefits of a robust ESG integration strategy. Quantifying the financial value of climate related risks and opportunities enables companies to move from qualitative ambition to strategic execution. Those that lead in this area are better prepared to compete, attract capital, and deliver long term results. Source: ERM #sustainability #sustainable #esg #business

The cost of decarbonisation is shifting—and so is the competitive landscape. Goldman Sachs' latest Carbonomics report highlights a two-speed decarbonisation path: while technologies like batteries, solar and biofuels continue to fall in cost, hard-to-abate sectors such as steel, cement and chemicals are facing rising decarbonisation costs—especially those dependent on green hydrogen. One of the most striking findings: localising clean tech supply chains could raise decarbonisation costs by up to 30%. Tariffs of over 100% would be required to make Western production of solar panels and batteries cost-competitive with imports. The tension between industrial policy, energy security and climate ambition is growing. So, why should industry press ahead with decarbonisation now? Because the commercial rationale is stronger than ever: Cost leadership: Access to cheaper renewable energy, falling battery prices and maturing biofuels can lower input costs—particularly in energy-intensive sectors. Market access: Regulations such as the EU Carbon Border Adjustment Mechanism (CBAM) are making low-carbon production a requirement for global competitiveness. Resilience and control: Investing early in clean infrastructure and diversified energy sources reduces exposure to fossil fuel volatility and geopolitical risk. Customer and investor pressure: Procurement standards and financing conditions are increasingly tied to measurable decarbonisation progress. While policy uncertainty and supply chain politics remain real barriers, the business case for low-carbon strategy is becoming clearer—and more urgent. For companies in heavy industry, the next five years will be pivotal. Not just for compliance—but for margin, access, and long-term value. #decarbonisation #carbonomics #industrytransition #climatetech #energytransition #greeneconomy #sustainabilitystrategy #cleanenergy #cbam #netzero #goldmansachs

The UK has some of the oldest and least energy efficient housing stock in Europe. As one of the largest funders of the UK housing sector, we at Lloyds Banking Group have a responsibility to help change this. One potential solution to this challenge is Property Linked Finance (PLF), an innovative financing solution that’s already been successfully launched in several countries around the world. Today, we’ve published the ‘greenprint’ for how PLF could be introduced to the UK in collaboration with the Green Finance Institute and NatWest Group. With PLF, homeowners and commercial property owners could finance 100% of their energy efficiency upgrades upfront, with finance linked to the property rather than the individual – so owners only invest until they sell their property or have paid off the measures and buyers benefit from the increased energy efficiency. As a new form of long-term finance, where the term can match the useful lifetime of the improvements, PLF addresses a gap in the UK market. In addition, PLF could also unlock: • Lower bills for homeowners through energy savings • Between £52-70 billion of investment in upgrading the UK’s inefficient building stock • The creation of skilled jobs across the UK PLF increases the range of financial solutions available to property owners. This time last year, we published a Housing Stocktake report, which found that while over half of homeowners would like to make their properties more efficient, few feel confident about how to get there. Retrofit options need to be more accessible, affordable and simple for our customers to implement – this is an exciting development that would empower them to do so. Read the report here: https://lnkd.in/emCtWUJ2 #GreenHomes #RetrofitFinance #Sustainability #ClimateAction #NetZero

How do we make decarbonising Britain’s homes a reality? Lloyds Banking Group alongside the Green Finance Institute and NatWest Group has published the ‘greenprint’ of how to apply property linked finance to the UK, so that we can scale the retrofitting of energy efficiency measures in our homes and buildings. The finance model allows homeowners to fund their upgrades with finance linked to the property rather than the individual. It means people only pay for the energy efficiency measures while living in their property, and when the house is sold, payments can be transferred to the next owner. Potential benefits include reduced bills for the property owner, and the creation of skilled jobs across the UK. We know that retrofitting is essential for meeting the UK’s net zero targets, and that we have some of the oldest and least efficient buildings in Europe. There are currently many hurdles – particularly in financing retrofitting on the scale necessary, and in incentivising landlords and homeowners to upgrade their properties. We need innovative financing solutions that will make retrofitting projects simpler and more accessible to consumers, and property linked finance is one measure we’re keen to explore. Read more about the research: https://lnkd.in/dqJkgKzh #GreenHomes #RetrofitFinance #Sustainability #ClimateAction Andrew Asaam Meryem Brassington

De Nederlandsche Bank (Dutch Central Bank) has done an interesting attempt to quantify the financial stability risks of nature ( 👉 https://lnkd.in/dZR6FXjr). They calculated the effects of five scenarios: 🔷 Scenario 1—Half-Earth protection: A global scenario whereby 50% of the Earth is categorized as a ‘protected area’. 🔷 Scenario 2—Pollination decline: A global scenario of a decline in wild pollinators, which decreases the productivity of certain crops. 🔷 Scenario 3—Taxation of EU imports associated with a high risk of deforestation: An EU scenario aimed at disincentivizing the import into the EU of products with a high deforestation footprint 🔷Scenario 4—Ending harmful subsidies: A scenario is a global tail scenario in which fossil fuel subsidies are eliminated. 🔷Scenario 5—Nitrogen measures: Two Dutch scenarios in which i. government measures to reduce nitrogen pollution directly impact agriculture, or ii. a lack of the former measures limits construction. Interesting macro result here: 💬 "𝙽𝚘𝚝 𝚝𝚊𝚔𝚒𝚗𝚐 𝚜𝚞𝚏𝚏𝚒𝚌𝚒𝚎𝚗𝚝 𝚊𝚌𝚝𝚒𝚘𝚗 𝚝𝚘 𝚛𝚎𝚍𝚞𝚌𝚎 𝚝𝚑𝚎 𝚗𝚒𝚝𝚛𝚘𝚐𝚎𝚗 𝚎𝚖𝚒𝚜𝚜𝚒𝚘𝚗𝚜 𝚘𝚏 𝚝𝚑𝚎 𝚊𝚐𝚛𝚒𝚌𝚞𝚕𝚝𝚞𝚛𝚊𝚕 𝚜𝚎𝚌𝚝𝚘𝚛 𝚖𝚒𝚐𝚑𝚝 𝚛𝚎𝚜𝚞𝚕𝚝 𝚒𝚗 𝚊 𝚠𝚘𝚛𝚜𝚎 𝚎𝚌𝚘𝚗𝚘𝚖𝚒𝚌 𝚘𝚞𝚝𝚌𝚘𝚖𝚎, 𝚠𝚑𝚎𝚛𝚎 𝙶𝙳𝙿 𝚒𝚜 𝟷.𝟸% 𝚕𝚘𝚠𝚎𝚛 𝚒𝚗 𝚢𝚎𝚊𝚛 𝟹." In other words: taking no action might have more negative consequences. Navigating assumptions and existing models for macroeconomic results has been quite a task. Extending this to financial stability requires new assumptions. Surprisingly mild results, even in extreme scenarios, hint at potential sustainability benefits. 🌱 Still, it gives me an uneasy feeling for a few reasons:: 1️⃣ It only shows the short-term risks of policies that help economic (and ecologic!) stability in the longer term. So it is presented at costs, while the alternative (not doing anything) will probably have higher costs in the future 2️⃣ It is only one-dimensional: the impact of ecosystem changes (to protect them) and the consequences for the economy and financial stability. Not the detrimental effects of financial sector investing and financing on nature itself. 3️⃣ Due to critical modelling, data and conceptual limitations, the outcomes suggest that transitions can be done without harming the financial sector itself. I doubt if that is the right conclusion (as the authors also more or less suggest). Different models (not general equilibrium/structural models) can give better insights. 🧐🔄 This is an important research field, hence very good that DNB did this first attempt. For the next attempt, I would be more interested in the longer term effects (also of doing nothing), non-linear effects and the inside-out effects (and responsibilities!) of financial institutions.