Can green finance trigger the recovery of COVID-19?

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Green finance – any financial activity designed to generate a climate-friendly outcome – could be the best way to recover from this pandemic and protect our planet.

Jennifer Oetzel, professor at the Kogod School of Business at American University, trains future business leaders in green finance concepts such as green economy and ethical management.

She focuses on financial risk in crisis situations and how companies can mitigate business risks while promoting peace in the countries where they operate.

For Jennifer, green investments and green loans, which have environmental criteria for the use of funds, could be the key to a long-term sustainable recovery from COVID-19 that takes into account the economy, the environment. and the social implications.

BusinessBecause spoke to Jennifer, who told us about three ways green finance initiatives could help us bounce back from COVID-19.


1. Green finance stimulates economic growth

Since the start of the pandemic, green investments have performed better than their non-green counterparts.

Green bonds – investments that support climate and environmental projects – were responsible for nearly 17% of all capital flows in 2020, though they only represent 2% of the total bond market.

These sustainable green investments could trigger broader economic growth, which would support the global economy as it recovers from the impact of the coronavirus, creating new employment, development and mobility opportunities, Jennifer notes.

“COVID has exposed so many social issues and at the same time there has been so much interest in green loans in particular,” recalls Jennifer. “In times of crisis, such as recessions and pandemics, green finance does not reduce income in the same way as many financial instruments. ”


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2. Global collaboration

As green finance grows as a movement, countries and businesses come together to work towards similar broad goals.

The United States Securities and Exchange Commission (SEC) is just one organization that wants to see increased efforts to address the long-term financial risks of the coronavirus and the effects of climate change.

“The SEC requires banks to report their climate risk so that the broader risk of their portfolio is clear,” says Jennifer. The SEC is also monitoring market functions and risks related to COVID-19 so that it can provide targeted regulatory relief and advice to those affected.


3. Increased support for social initiatives

Green finance also encourages investment in renewable energy and climate risk mitigation, which in turn helps solve important social issues, including the consequences of COVID-19.

With greater investment in sustainable business initiatives like green energy and recycling, Jennifer predicts that there could be more jobs and, as a result, greater economic prosperity.


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This will likely have a positive impact for communities that have been disproportionately affected by the pandemic, such as communities of color, those living on the poverty line, and those in poor health. Since climate change also has a disproportionate impact on the poorest communities, sustainability and social well-being go hand in hand.

“Environmental change can have a huge impact on social well-being and health, so even if someone is only interested in green funding, they still help people beyond that,” notes Jennifer.

Business schools like Kogod play a key role in developing future green finance leaders to lead these initiatives.

Kogod’s MS in Sustainability Management equips students with the tools they need to solve organizational problems in their environmental context and produce environmentally and socially responsible solutions.

Kogod’s Master of Finance program also gives students a solid foundation in global emerging markets and investment analysis, which is invaluable for students interested in the role of green finance in economic recovery.

With a sustainable and green finance approach, Jennifer says, businesses and the economy at large can recover from COVID-19.



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