Dr. FIRDOUS AHMAD MALIK
Climate change is the term used to describe the observed shifts in the Earth’s climatic patterns through time, including changes in temperature, precipitation, winds, and other meteorological components. As a result of discussions and studies demonstrating the disastrous repercussions on the environment and human life, climate change has gained international attention. The poor are most impacted by climate change because of their lack of resources. In order to encourage investors to fund climate-friendly projects that would lessen the effects of climate change on the environment, especially for the poor, green finance offers a distinctive platform.
Due to their scarce resources and inability to pay for the detrimental effects of climate change, the impoverished population suffers more. The deterioration of the environment, which may result in natural disasters including floods, droughts, deforestation, and poor air quality, has a tremendous impact on poor people. These tragic occurrences have gravely detrimental effects on the poor, causing food shortages, homelessness, and loss of necessary resources. The slow-onset environmental changes like desertification, glacial melt, and ocean acidification are also difficult for the poor to adapt to. As a result, there is a connection between poverty and environmental instability that requires simultaneous attention.
The possibility provided by green finance allows for the poor to be helped with the problems that climate change has brought about. Green financing is a cutting-edge method of supporting initiatives that support sustainable development. These initiatives seek to enhance energy efficiency, save natural resources, and lessen carbon emissions. Green financial solutions can be designed to entice investors and lower the cost of such initiatives for underprivileged populations.
Additionally, green finance offers investors enormous prospects for margin increase. As more businesses adopt the idea of climate-friendly investments, the market for green bond issuances has expanded. Principal participants in the green financing industry include insurance firms, pension funds, and international investment banks. Companies that finance endeavour to match their investments with the Paris Agreement’s objectives to avoid global warming of more than two degrees Celsius. Such investments benefit the environment while also giving investors a financial return.
Understanding the financial requirements and preferences of the disadvantaged populations is essential to achieving considerable penetration and acceptance of green finance. This would assist financial lenders in creating products that cater to their unique demands and increase the appeal of green investments to such areas. The regulatory framework is also important for the development of green financing. Governments could give tax credits, subsidies, and incentives to expedite investments in sustainable projects to boost green finance.
In conclusion, poor populations experience the worst effects of climate change, including increased health risks, environmental instability, and poverty. Green finance is a cutting-edge platform that connects financiers and decision-makers to finance climate-smart projects to reduce negative effects. A win-win situation for the environment and finances, investments in green finance also offer investors enormous margin expansion prospects. To effectively mitigate the effects of climate change on the poor, governments, private sector players, and financial intermediaries must collaborate to promote green finance.
(Author is Research Fellow at National Institute of Public Finance and Policy (NIPFP). Email: [email protected])
