Taking a step forward to combat climate change, the 53-nation Commonwealth grouping has set up a new USD 1 billion Commonwealth Green Finance Facility (CGFF) to support environmental projects within the former colonies of the British empire. The announcement came just ahead of the COP21 summit in Paris on November 30 and signals the grouping’s commitment to join global efforts to curb greenhouse gas emissions.
“The CGFF will start with a working group, bringing together representatives from countries including Australia, Britain, Canada, Malaysia and Nigeria, and financial companies including HSBC and PricewaterhouseCoopers,” the CGFF said in a statement.
The facility would initially be capitalised with USD 1 billion (950-million-euro) through sovereign contributions, green bonds, and is expected to be fully operational by the end of 2016. Announcing the project during the first day of the 2015 Commonwealth summit, this move by CHOGM is being seen as a stepping stone towards the UN climate conference in Paris that begins on November 30.
The CGFF hopes to “improve the bankability of green projects in Commonwealth countries, including the Commonwealth’s small island states, by providing risk cover and credit enhancement,” the statement said. Green bonds (raising funds for specific climate-related programmes or assets) have gained popularity over the past couple of years. Big businesses have latched on to the profit to be gained through the potential of green economy. On November 25, HSBC had issued its first green bond, raising 500 million euros (USD 531 million), joining banks such as the National Australia Bank and Norway’s DNB ASA.
The World Bank and the European Investment Bank are the main market players at present. However, the field has been rapidly growing in recent times. According to Bloomberg, sales of green bonds over the past five years totalled over USD 84 billion (79.3 billion euros).
HSBC said its funds will go towards renewable energy projects as well as water management and climate change adaptation. The global financial giant has called for green bond projects to be standardised.
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