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Principle 3: PROMOTE climate smart objectives

Promote approaches to generating instruments, tools and knowledge on how best to overcome risks and barriers to investment in low-carbon and resilient investments. This may include mobilizing and catalysing additional financing and developing specialized financing vehicles/ products, such as green bonds, risk sharing mechanisms or blended finance. Engage clients and other stakeholders (e.g., rating agencies, accounting firms) on climate change risks and resilience, and share lessons of experience to help further mainstream climate considerations into activities and investments.

Many financial institutions see the business opportunity in financing climate smart investments and have dramatically increased finance in recent years, most notably in renewables. This has not necessarily required the development of new or distinct business lines to capture opportunities linked with climate change, although some have chosen to establish dedicated funds and facilities to do so.

Principle 3 highlights the need to incorporate climate change considerations in routine business development efforts to seek out and help create new investment opportunities. For many development finance institutions, client engagement and development of projects are often driven by country demands, and for many private finance institutions proactively promoting climate smart objectives is an opportunity to increase demand for financing.

 

Implementing Principle 3 may include the following actions:

  • Increasing climate-related activities and investments
    • Offering green products and services
    • Developing business among clients and market segments that contribute to achieving climate goals
  • Accessing and mobilizing new sources of climate finance
    • Accessing public climate finance
    • Using risk sharing or blended finance products to mobilize additional finance
  • Reducing activities with adverse climate impacts
    • Ensuring that climate considerations are taken into account in decision making and due diligence across all products and services
    • Engaging with clients on climate change risks and opportunities and alignment with the Paris Agreement
    • Using exclusion and divestment approaches strategically for activities with adverse climate impacts