Green finance crucial for inclusive and sustainable growth

Green strides, especially in development finance, will help nations recovering from COVID-19 to achieve inclusive, sustainable economic growth, as a result of the greater global synergy, cooperation on international standards and development finance.

Countries should work more closely to stop the pandemic and prevent damage to the economy. But it is also important for them to transform their development models and pursue growth with less carbon emissions, United Nations Secretary-General Antonio Guterres said in his video address to the International Finance Forum in Beijing last month. Though the global economy is picking up, the world is still faced with a "lost decade for development". There are still grave setbacks in the world's efforts to achieve the Sustainable Development Goals by 2030, keep the 1.5-degree goal of the Paris Agreement within reach by 2050, he said.

Some experts, however, are of the view that the low-carbon path may not be that easy for developing countries with a relatively slower pace of economic and industrial upgrading, as their efforts are focused largely on dealing with pandemic fallouts.

Efforts are already underway in this regard in China, they said. In the Government Work Report delivered in March, Premier Li Keqiang said that to become carbon-neutral, the country must have policies to foster green and low-carbon development.

According to a study conducted by Tsinghua University last year, to meet the national green goals, China will need to invest about 138 trillion yuan ($21 trillion) by 2060.

This means that "green finance "will become crucial for investment, and development banks must do more to help and contribute in this regard, said Zhou Xuedong, vice-president of the China Development Bank.

Past experiences have shown that development finance institutions are capable of providing long-term, large-scale funds at relatively lower cost, he said.

But what is more crucial is to make sure that the idea of green finance is deeply integrated into each part of the bank's services. He said that the China Development Bank will work more proactively to foster international cooperation in green finance and adopt innovative steps to boost green lending.

While making green financing more comprehensive, it is necessary to have mandatory information disclosure and effective standards for green finance products, such as green bonds.

Though different countries have different responsibilities, the low-carbon emission standards and relative green finance support should be unified, said Jin Liqun, president of the Asian Infrastructure Investment Bank. Jin said that though the international community is making progress, more efforts are needed in coming up with effective problem-solving mechanisms.

Consensus also needs to be reached as early as possible, he said.

Some experts believe that the government also has a critical role to play. Qi Ye, a professor of environmental policy at Tsinghua University School of Public Policy and Management, believes that despite support from development finance, governments of all countries must find ways to innovate their governance capabilities.

"Realizing greener growth and reducing carbon emissions does not mean only changes in industries, but also a lot of technological innovation," he said. "Governments should improve their governance capability in such a manner that the incentive role of the market is brought into full play to generate more technological innovation in green development."