Experts have called for urgent collaboration to tackle the issues in climate finance at a sub-forum during the 14th Annual Meeting of the New Champions in Tianjin, China, on Wednesday.
These experts representing academia, banks, investment institutions, and enterprises focused on enhancing the bankability of “net zero emission” projects through policy changes during the sub-forum.
Calls for reforming financing system
Naoko Ishii, director of the Center for Global Public Affairs at the University of Tokyo, who recently attended the New Global Financing Compact Summit in Paris, emphasized the need for reforming the current financing structure.
She said that middle-income countries and emerging economies lack sufficient support to address climate change effectively.
Ishii highlighted the importance of reducing costs and leveraging both government and private sector funds through an integrated financing approach.
Matching risk appetite with climate projects
Investment institutions often face challenges in aligning their risk appetite with climate projects, particularly for traditional investors. The long-term nature of these projects and the absence of historical performance data pose difficulties in accurately assessing risks.
Fred Hu, founder and chairman of Primavera Capital Group, stressed the necessity of providing decent returns to compensate for risks in sustainable financial investments.
Hu called for the introduction of transparent policies by the government to reduce uncertainties, especially for long-term investments.
China’s experiences
Deng Jianling, general manager of China Huaneng Group, shared China’s experiences in renewable energy projects.
He said there were initial uncertainties associated with wind power and photovoltaic projects, but with reduced manufacturing and installation costs, as well as improved operational reliability, these projects now yield better returns.
Deng said that Huaneng Group devotes 80 percent of its investment to renewable energy and has successfully commissioned 10 million kilowatts of wind and photovoltaic power stations in the first half of 2023.
Commercial banks and private investors have shown increased interest and engagement in these projects, he said.
Transitional phase and commitment
PE/VC institutions are adopting new approaches to evaluate new energy companies, differentiating them from fossil fuel investments of the past, Hu said.
Anju Abrol, CEO of ING Commercial Bank Asia Pacific, spoke of the challenges faced in the transition from old to new energy sources.
While the scale of large-scale new energy sources is currently limited, Abrol emphasized the need for institutions to act and invest in these areas. ING aims to mobilize $20 billion annually for green finance by 2025.
Addressing greenwashing
A notable concern in climate financing is “greenwashing,” which involves misleading or false claims about environmental and climate-related aspects of financial products, investment strategies, and companies.
Commitment is key to avoiding such deceptive practices, according to Abrol.
Ishii said that certain transformations may take several decades. She emphasized the importance of coordination between governments, enterprises, and the international community to enhance certification standards through collaborative efforts.
