Green banking, or just green-washing?

The financial services sector is a critically important channel for directing capital towards more sustainable projects. This is the aim of Water Financial.

Sustainable financing has been defined by Forum for the Future as “the provision of financial capital and risk management products to projects and businesses that promote, or do not harm, economic prosperity, environmental protection, and social justice.”

According to a report by the Monitor Institute, so-called “impact investments” - social and environmentally oriented investments - could hit US$ 500 billion within the next 5 to 10 years.

A rising tide internationally...

In the UK, the “Lib-Con” government coalition agreement includes environmental policy and the leaders of both parties expressed the intention to form a green economy. In Europe, jobs in low-carbon sectors are already outstripping those in traditional, polluting industries. In the USA, President Obama raised the development of a green economy to the top of the country's agenda and made it clear that he sees a direct link with the country's long-term economic interests.

and locally

In South Africa, host of the 17th United Nations Climate Change Conference, there is evidence of an increased focus on a local green economy. The president has urged that the country be developed sustainably and job creation is seen as one of the key potential benefits. The Industrial Development Corporation (IDC) has estimated that 300 000 jobs could be created in the next 10 years in the renewable energy sector alone. Climate change is seen as having a significant impact on societies, and particularly in Africa. According to an Intergovernmental Panel on Climate Change (IPCC) report, the extent of global warming implies that Africa will see 70 to 400 million people perish at the hands of the climate change phenomenon in the next 20 years alone. In this context, it is incumbent upon the financial services sector to steer finance into innovative initiatives seeking to mitigate the effects of climate change as a matter of priority.