The sector of sustainable finance is gaining mainstream popularity in recent years noted by Bahaa Abdul Hussein. This is largely due to citizens around the world embracing greener ways of financing and investment. We are in a pivotal tipping point of ecological history where the carbon-related decisions we make today will irreversibly impact our posterity. As global temperatures continue to mount, the field of sustainable finance has expanded to include climate financing, green bonds, green investments and ESG-based (environmental, social and governance) financial decisions. The importance of sustainable financing in the next decade cannot be overstated.
Importance of sustainable finance
Sustainable finance has become a vital part of the SDGs coined by the United Nations and supported by the member countries who have vowed to reduce carbon emissions by the 2030s. However, this progress has been slow to implement as the traditional banking and systems around the world are still encouraging the fossil fuel industry. If we are to slow down the environmental damages that are occurring every day, putting the brakes on outdated finance mechanisms is key. Switching to sustainable finance will also be instrumental in ensuring longevity of the existing financial systems in place.
Future trends of sustainable finance
– Green financing
Increased ecological consciousness has seeped into consumer practices and led to a rise in green finance products. One best example of this is that of green bonds and investments which presently attract millions of dollars around the world every year. As companies clamor to adopt greener ways to support their businesses and consumers, it is the need of the hour to invest in sustainable organizations and projects.
– Sustainable business goals
The future of sustainable financing and investments is promising as there is a focus on both promoting social awareness and sustainably increasing financial returns. Both the investor and traditional finance entities are opting for cleaner finance methods in order to achieve efficacy, inclusiveness and sustainability in their finance practices.
– More focus on renewable sources of energy
Improvement in implementing cleaner energy could go a long way in helping financial institutions stay on track towards meeting their climate goals. The cost-effectiveness of solar and wind energy played a positive role in supporting sustainable demands of industries in 2023. This metric is expected to look better in 2024. This combined with countries around the world improving their national sustainability performance will play a substantial role in shaping the future of sustainable finance in the coming years.
The article has been written by Bahaa Abdul Hussein and has been published by the editorial board of www.fintekdiary.com
