Thanks to some financial assistance, the green debt market is developing far faster than the actual projects it was meant to fund.
While no official estimate of the difference between green finance and true green business exists, climate activists and scholars worry that bankers’ calculations overestimate their contribution to the battle against climate change.
Activists and auditors talk about inflated prices
“Financial institutions can imagine themselves contributing more to climate change than they do,” said Stanislav Stefaniak, a sustainable finance specialist at the Warsaw thinks tank Instrat.
We’re talking about green loan resale, in which the financial industry’s help to the main topic is credited as often as the outstanding balance is refinanced. After the loans are made, bankers can convert them into bonds, which they can then sell to another financial institution, thus doubling green financial assets without requiring them to be invested in actual green initiatives.
“Due to the private nature of the credit market, it is difficult to match the number with possible double-counting.” “The drawback is that we risk gaining a sharper picture of the actual decarbonization that financing institutions are providing,” Maya Godemer, Sustainable Finance Analyst at Bloomberg NEF, said.