Unifying Green Finance: Towards a Neutral-Standard Environmental Use Taxonomy

Executive Summary

The language of Green Finance varies across the globe, complicating efforts for a coordinated response to environmental challenges. This whitepaper explores the creation of a standard-neutral taxonomy for environmental use of proceeds, comparing China’s Green Bond Endorsed Project Catalogue and the Common Principles for Climate Mitigation Finance Tracking.

Joint research was conducted by the European Investment Bank and the Green Finance Committee of China Society for Finance and Banking in 2017. The research endeavors to streamline understandings and definitions in the green finance sector, thereby fostering better cooperation worldwide.

Technical Background

The policy frameworks for green finance in different regions of the world vary significantly. This diversity leads to discrepancies in the understanding and application of green finance principles. Focusing on G20 initiatives, PRC’s actions, and EU’s efforts, we provide a comprehensive background of the existing landscape.

System Architecture

The taxonomy is built on two conditions for clarity; completeness & precision, and comparability. The architecture includes a detailed mapping and comparison of various practices like the China Green Bond Endorsed Project Catalogue and the MDB-IDFC list of climate mitigation activities.

Implementation Details

Our approach involves a step by step evaluation of existing practices, catalogues, frameworks, and policy objectives. Feedback from ongoing consultations with International Financial Institutions and green bond external reviewers is considered and factored into the final recommendations.

Code Examples

While our research doesn’t involve traditional coding, we use a similar meticulous approach in mapping and comparing various standards and catalogues. As such, the “code” here is the detailed precision and systematic nature of our research.

Performance Analysis

Our research’s performance is gauged by its potential impact on green finance. By creating a validated and unified language for green finance, we expect to see enhanced cooperation, more efficient transactions, and ultimately, better environmental protection efforts.

Security Considerations

While the security in our study does not involve data protection or cyber threats, we do consider the stability and safety of the global financial system. The proposed taxonomy aims to mitigate the risk of miscommunication and misunderstanding, thereby contributing to a secure and robust green finance ecosystem.

Troubleshooting

In case of discrepancies or issues, our approach involves revisiting the mapped taxonomies, reassessing the comparative analysis, and seeking feedback from experts in the field.

Conclusion

The need for a common language in green finance cannot be overstated. Our research represents a crucial step towards creating a standard-neutral taxonomy, setting the stage for a more integrated and effective global environmental protection strategy.