"Green" Investments
28.09.2020
An online conference on Sustainable Development Goals "Green Growth" in Kazakhstan: Greening the economy" was held last week. At the end of the event, special attention was paid to the topic of "Green Investments". This year Kazakhstan issued the first green bonds together with the Damu Fund. The interest rate was subsidized by UNDP to support green economy projects. Aidar Kazybayev, Managing Director of the Administration of Astana International Financial Center: "We have already made proposals to the Environmental Code to include such concepts as Green Finance, Green Investments, and Green Taxonomy. This will involve a wider turnover of companies and resources. The Environmental Code should provide all possible resources for achieving the sustainable development goals". Transition to green investments is of great importance in the fight against climate change, reducing greenhouse gas emissions, water pollution, deforestation and contributes to the sustainable development of the natural environment. Green investments usually include capital raising tools such as green bonds, loans, green securitization, etc. The main difference between "green" tools is the low cost of raising funds – usually no more than 5% per year. The funding covers land use, forestry and water management, nature protection, and disaster resilience. "When a company issues a green bond, it is required to disclose information for what purposes. This is the principle of environmental responsibility," Aidar Kazybayev explained. What does the company get in addition to money by issuing "green" bonds? Guaranteed image improvement, as well as ability to raise funds at lower rates or receive state economic support in the form of tax incentives and other measures. Municipalities can also issue such bonds themselves. For the first time, such securities were issued by the European Investment Bank in 2007 to finance projects in the area of alternative energy sources. UK Greenbank specializes in this area. Speaking about state support for "green" investments, let's give the example of Poland, which in December 2016 became the first Issuer of sovereign "green" bonds to the amount of EUR 750 million. The demand for securities exceeded the supply three times. Bonds were used to finance and refinance projects in the area of renewable energy, transport and agriculture, such as improving railway safety and reconstructing railway tracks. In 2016, the People's Republic of China sold more than USD 23 billion worth of green bonds. For several years, China has remained the world leader in green finance. However, the largest share of funding for nature protection / climate change activities is private capital. There are many examples of using "green" finance in the global business environment. In 2014, the French Energy and Gas Company Engie S.A. has issued green bonds to the amount of USD 2.5 billion to finance its renewable energy projects. In the same year, Toyota Financial Services issued green securities to the amount of USD 1.75 billion to finance consumer loans to buy and lease its electric vehicles, "hybrids" and low-emission vehicles. According to the Moody's estimates, the total issue of green, social and sustainable bonds could reach USD 400 billion in 2020. This concludes the series of publications of the conference on SDGs in memory of Saltanat Rakhimbekova, "Green Growth in Kazakhstan: Greening the Economy". Such expert meetings will be regularly held at the platform of the Economic Research Institute to discuss joint initiatives, topical issues and their solutions. We believe that ideas of Saltanat Temirkulovna will be implemented! See you soon!
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