The importance of green finance

Impacts related to climate change have no borders. People need financial security as well as resilient working and living environments. That is why climate change mitigation and environmental protection are among the most pressing tasks when it comes to development cooperation. There is an opportunity to deliver improved social, environmental and economic outcomes for people, including support to job creation and more resilient communities, as well as a cleaner and healthier environment. Investments in climate change mitigation and adaptation measures are essential; factors such as strong domestic financial markets and access to green finance play a key role and contribute to the “greening” of economic activities and living conditions worldwide.

Another important factor is the ability of financial intermediaries to fully and duly assess and address climate risks of investments and to provide a transparent disclosure of financing green assets, including their emissions and taxonomy alignment, as well as overall reporting on Environmental, Social and Governance (ESG) according to standards agreed upon. In our view, a proper and transparent disclosure of financing green projects is fundamental. By disclosing and validating financing of green projects, more finance will flow into those investments, and green washing can be avoided.

How we shape green finance

The Financial Sector Development department of AFC Agriculture and Finance Consultants (AFC-FSD) provides an array of advisory services to financial intermediaries, in the field of green and energy nexus finance.

AFC-FSD advises financial institutions on how to establish and successfully develop their own “greening” strategy. That strategy influences all financial products and services and ensures that they are not only commercially viable, but also engage in climate-friendly activities, stimulate economically healthy businesses and responsible practices as well as improve living conditions.

We help financial institutions across the globe with the development, implementation, and promotion of innovative financial products, which support a smooth transition from a conventional to a sustainable, climate resilient economy. AFC-FSD has the capacity and programmes to train and coach staff on day-today operations, design and support awareness raising on climate risks, and demonstrate opportunities and benefits of green and environmentally sound investments to financial institutions and their clients.

We support financial institutions to identify, evaluate and manage environmental and social risks that are generated by the activities and projects they finance. In addition, AFC-FSD assists in performing Environmental and Social Due Diligence and in establishing an Environmental and Social Management System at the financial institution.

Our experience in climate finance further expands to developing green and energy-nexus loan products, including energy and recourse efficiency, as well as small-scale renewable energy financing for micro, small and medium-sized enterprises (MSMEs) and households.

In addition, we support companies and SMEs– potential and current clients of financial intermediaries– to recognize opportunities, evaluate benefits of green investments, and prepare bankable loan applications for further negotiations with banks.