The GIP Webinar on Financial Support for Transition to Net Zero was held by Standard Chartered, co-chair of the GIP Working Group 3, on February 23, 2021, with support from the GIP Secretariat and Hong Kong Green Finance Association. The event attracted over 130 representatives from GIP members.

In his opening remarks to the webinar, Thomas HELLER, Professor of Political Economy at Stanford University and the Chairman of the Board of Directors at Climate Policy Initiative commented on three important ongoing trends. First is the mainstreaming of climate and the need to transition to a net zero economy. This represents a regime shift and raises questions about timing and coordination. The second is the recent growth in green finance, which demonstrates that the market has potential to drive change, with or without strong state behaviour.

In China and much of Asia, however, relatively recent fossil fuel related infrastructure investments pose challenges to the rise of green investment. Thirdly is the rise of transition risks for financiers and investors. HELLER emphasised that increasing physical risks demonstrate the need not just for disclosure, but also for the systematic management of risks.

The Webinar on Financial Support for Transition to Net Zero included two sessions, the first of which focused on innovation for the climate transition, the second of which focused on financial products for the net zero transition.

Session 1:

Dr. Barbara BUCHNER, Global Managing Director at Climate Policy Initiative, noted that China has been the largest source of climate finance globally. However, over the next decade, it faces an investment gap of US$1 trillion, three to four times of what is currently provided. There are opportunities to encourage innovation in small and medium-sized banks, green funds, PPP structures, green financial pilot zones, and in BRI countries. 

Dr. Alexander FISHER, Director of Biodiversity, Climate and Environment at GIZ China, shared Germany’s experience of transitioning toward a low carbon economy, including PPP structures, government green bonds and asset swap mechanisms which have helped to consolidate renewable energy assets. 

Carel CRONENBERG, Associate Director of the EBRD, shared his thoughts on the EU Taxonomy. He noted that it is important to see how different taxonomies can co-exist and provide clarity to green investments around the world

Session 2:

“Transition finance is the gateway to achieving carbon neutrality and requires urgent action and innovation across the whole ecosystem in order to scale up,” said Tracy WONG-HARRIS, Head of Sustainable Finance for Greater China and North Asia at Standard Chartered Bank and Deputy Secretary-General of Hong Kong Green Finance Association (HKGFA), in the second session of the webinar. There has been an exponential growth in green and sustainability linked financial products globally, with a focus on social bonds in 2020 in response to the pandemic. The trend reflects increasing awareness and urgency from financial institutions to address decarbonisation. 

The session saw participants discuss the financial products they offer and ways to scale up current green financing. Suggested catalysts included the incorporation of pricing for climate externalities and education and capacity building in the market on transitioning and sustainability. In addition to improving data disclosure, a key enabler lies in the unification of sustainable finance standards and taxonomies globally. China and the European Union are in discussions to set-up a taskforce for further discussion on this issue.