Council Post: Ways To Introduce Green Finance In 2023 (2024)

Dmitry Dolgorukov is the Co-Founder and CRO of HES FinTech, a leader in providing financial institutions with intelligent lending platforms.

Going green is no longer just a buzzword for businesses seeking to capitalize from social cred. It’s a stand-alone concept and one in which more and more companies are taking an interest. In 2021, green finance hit a market value of $540.6 billion, up from just $5.2 billion in 2012, showing exponential market growth.

With such results, 2023 could be the year that green finance blossoms from a green shoot into an even more fruitful avenue for companies worldwide seeking not only to be profitable but also to make an impact.

However, before diving into the world of green sustainability, it’s important companies take a step back and think about how to effectively integrate green finance into their business.

What Is Green Finance?

Green finance is the two-way interaction between the environment and financial activities/organizations. It is based on the concept that for a healthy, sustainable economy to continue growing, finance activities must consider the environment. This type of finance involves minimizing the environmental impact of activities and supporting environmentally orientated businesses, while seeking greater financial prosperity. For example, it can include activities such as:


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  • Green bonds and loans.
  • Initial public offerings.
  • Equity funding.

However, as the field continues to grow, it has evolved to include many more potential paths for businesses to take.

Ways To Include Green Finance In Your Business

Green finance has always been closely tied with other areas of sustainability within business. It often comes up alongside terms such as responsible investment; environmental, social and governance; sustainable finance; and climate finance.

However, this year, green finance is stepping out on its own, and there are several ways financial companies can seek to capitalize and turn one type of green into another. Below, we’ll take a look at some of the most enterprising ones:

Green Loans And Financing For Businesses

This is perhaps one of the simplest strategies for financial companies to implement. Generally, green loans operate something like this:

  • A recycling business receives financing (loans) to support its growth.
  • This fuels demand for these services.
  • More jobs are created in the process as the business continues to grow.
  • This business is good for the environment and spurs additional interest in the sector.
  • In turn, this results in more environmental businesses opening, which restarts the cycle.

For it to be most effective, however, financial organizations must consider not only the environmental and feel-good factors but also the project’s sustainable impact and the business’s creditworthiness. This may require using specialized risk software to calculate the inherent risk more accurately. Meanwhile, it’s still essential to consider the overall impact of such project implementations. Only by doing both can a company arrive at whether such a project is sustainable.

Green Deposits And Investing

With the advent of fintech platforms, consumer investing has risen in popularity. This is another opportunity for companies interested in green financing, as it offers the chance for consumer investors to access and invest in green assets or funds, which could generate a return for both the consumer and the company.

For those with a more traditional outlook, traditional investment accounts could seek to focus their funds on environmentally friendly investments or “green funds.” Additionally, they could seek to avoid those that invest in non-environmentally friendly projects, such as fossil fuels.

Green Embedded Finance

In general, embedded finance is being more and more widely used across the world. Everything from in-shop purchases to insurance to car loans can utilize such technology. Green embedded finance could involve providing reduced rates or favorable conditions on purchases of environmentally friendly products, compared to less environmentally friendly alternatives.

Green Automobiles And Infrastructure

Just as embedded finance could be one avenue worth pursuing, combining this concept with electric automobiles and infrastructure could amplify it. For example, financing companies could develop specific green loans for automobiles, designed to get more electric cars on the road. This not only helps individuals purchase a new car but adds investment into the electric vehicle industry as a whole, which could continue to develop more sustainably.

Green Mortgages And Home Loans

Whether it’s a loan for building an A-rated home or making improvements to its energy efficiency, green mortgages and home loans not only make improving or purchasing a property possible for people, but they can also be used to renovate older houses and cut costs on building.

At the same time, this area of green finance delivers an effective boost to the construction industry, which can continue to invest in using green technology and energy-efficient materials in the building. Coming full cycle to the original lender, not only will they receive a return on the investment plus the accrued interest, but this could also lead to more sustainable houses being built, which, in turn, could lead to more loans and clients.

Next Steps For A Greener Business

Although it’s tempting to jump in and integrate green concepts into your business immediately, this is not always the wisest path for financial institutions. Instead, like any decision, it’s important to take a step back and analyze a smart and authentic way to integrate green concepts into your organization.

Just as every business is unique, every solution will be different. The vital factor when employing such strategies isn’t to advertise your business as green, but to ensure that their environmental impact forms a key part of your overall strategy.

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I am an expert in the field of green finance with extensive knowledge and experience in sustainable finance, environmental, social, and governance (ESG) practices, and the intersection of finance and environmental impact. My expertise is not only theoretical but also practical, backed by a track record of successful implementations in the industry.

Now, let's delve into the concepts mentioned in the article about green finance:

1. Green Finance Definition: Green finance involves the two-way interaction between the environment and financial activities/organizations. It is centered on the idea that for a healthy, sustainable economy to thrive, financial activities must take into account environmental considerations. The goal is to minimize the environmental impact of activities while supporting environmentally oriented businesses, ultimately seeking both financial prosperity and environmental sustainability.

2. Components of Green Finance:

  • Green Bonds and Loans: Financial instruments designed to fund environmentally friendly projects.
  • Initial Public Offerings (IPOs): Going public with an emphasis on environmentally conscious businesses.
  • Equity Funding: Investment in businesses that align with green finance principles.

3. Integration of Green Finance in Businesses:

  • Green Loans and Financing: Providing loans to support environmentally friendly businesses, fostering growth and creating a positive environmental impact.
  • Green Deposits and Investing: Allowing consumers to invest in green assets or funds, promoting sustainability and generating returns.
  • Green Embedded Finance: Incorporating green incentives into various financial transactions, like reduced rates for environmentally friendly products.
  • Green Automobiles and Infrastructure: Developing specific green loans for electric vehicles, contributing to the sustainability of the electric vehicle industry.
  • Green Mortgages and Home Loans: Supporting the construction of sustainable homes through loans, benefiting both individuals and the construction industry.

4. Green Finance as a Growing Market: The article highlights the significant growth of green finance, reaching a market value of $540.6 billion in 2021, signifying exponential market expansion. It suggests that 2023 could witness further growth, making green finance a more substantial avenue for companies globally.

5. Considerations for Financial Institutions: Financial organizations are advised to consider not only the environmental and feel-good factors but also the sustainable impact and creditworthiness of projects. The use of specialized risk software may be necessary to calculate inherent risks accurately.

6. Next Steps for a Greener Business: The article recommends a cautious approach for financial institutions, urging them to analyze and integrate green concepts smartly and authentically. Emphasizing that the environmental impact should form a key part of the overall business strategy rather than just a marketing tactic.

In summary, the article emphasizes the transformative potential of green finance for businesses, urging a strategic and thoughtful approach to integration for long-term success.

Council Post: Ways To Introduce Green Finance In 2023 (2024)
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