Written on 23 Sep 2022.
Green financial sector initiatives, including financial policies, regulations, and instruments, could play an important role in the low-carbon transition by supporting countries in the implementation of economic policies aimed to decarbonize their economy.
Green financial sector initiatives (GFSI) are expected to play a main role in climate mitigation. However, the conditions under which GFSI could enable the scaling up of green investments and the achievement of national climate mitigation objectives, while avoiding unintended effects on macroeconomic and financial stability, have still to be understood.
We contribute to fill this gap by developing a theory of change for GFSI focusing on green macroprudential policies, green monetary policies, and green public co-funding and identifying the criteria for applicability and conditions to maximize impact, says Irene Monasterolo
The theory of change (ToC) provides an operative framework for delivering the transformational change in climate finance needed to achieve ambitious climate mitigation objectives in EMDES, in the short time available.
It’s implementation framework is composed of four steps:
In principle, the ToC and its implementing framework can be tailored and applied to any country
TOPICS: Green Finance, Greenhouse Gas Accounting, Green Finance, Mechanisms, Macroprudential Policy, Monetary Policy
This paper is a product of the Climate Change Group and the Finance, Competitiveness and Innovation Global Practice. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world.