Green Finance Models for Climate-Resilient Economies

Abstract

The problem of climate change is a type of systemic risk to the stability of the world economy, which requires financial systems to be transformed to deliver climate-resilient development pathways. Green finance has become a highly important tool in the mobilization of capital towards environmentally sustainable and climate-adaptive investments. This research paper reviews the green finance models which facilitate climate resilient economies through introducing the environmental, social, and governance (ESG) principles in financial decision making process. The research adopts a conceptual and analytical approach to investigating important green finance tools, institutional framework, and policy tools that facilitate mitigation and adaptation to climate change. The article suggests a green finance integrative model that is connected to financial innovation, alignment in regulation, and resiliency. The results indicate that good models of green finance can improve the resilience of the economy, decrease financial risks posed by climate change, and encourage the growth of a sustainable economy. The paper adds to the increasing body of knowledge on sustainable finance and offers policy implications to policy makers and financial institutions and investors aiming to create climate resilient economies.