Heading into the New Year, global financial markets are experiencing yet another bout of volatility and turbulence. Many political, economic, and environmental uncertainties cloud the year ahead. From a strategic perspective, 2015 built a new set of policy foundations for the global economy, signaling new directions for the financial system. We now have the Global Goals for Sustainable Development, which plot out an annual investment pipeline measured in the trillions to end poverty and They also combine increased prosperity with social inclusion and environmental regeneration. The Paris Agreement, which signaled the shift to a low and ultimately net zero carbon economy, stressed the urgency of improving resilience to climate shocks and mobilized financial institutions in novel ways.
Building an open and resilient financial system is crucial to supporting sustainable growth and development. The G20, which is an international forum for the governments and central bank governors from 20 major economies, remain committed to finalizing remaining critical elements of the regulatory framework. They seek a timely and consistent implementation of the agreed financial sector reform agenda.
2016 was the best year for the global labeled green bonds market as it saw the largest-ever issuance. A total of $81 billion worth of labeled green bonds were issued in 2016, a massive surge from the total issuance in 2015 of $42.2 billion. This jump was on expected lines as analysts had predicted significant thrust from the developing markets like India and China. The Asian countries, especially China, contributed immensely in terms of first-time issuers.
There are estimates that all carbon emissions from fossil-fuel combustion, waste gas flaring, and other industrial combustion processes are on a decline world wide. In addition, renewable energy seems more plausible now that new solar panels are cheaper than a comparable investment in coal or natural gas. Solar and wind is now the same price or cheaper than new fossil fuel capacity in more than 30 countries. It is not only a commercially viable option, but an outright compelling investment opportunity with long-term, stable, inflation-protected returns.
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