Definition of Green Finance
Dr. Nannette Lindenberg, April 2014
Green finance in the literature:
Up to today, we do not have a precise and commonly accepted definition of green finance for two
reasons. First, many publications do not try to define the term – for instance neither IFC (2013) nor
Spratt and Griffith-Jones (2013) include a definition of green finance1 – and second, the definitions
that are proposed vary significantly. Among the few definitions that can be found in the literature
are the following:
• Höhne / Khosla / Fekete / Gilbert (2012): "Green finance is a broad term that can refer to
financial investments flowing into sustainable development projects and initiatives,
environmental products, and policies that encourage the development of a more sustainable
economy. Green finance includes climate finance but is not limited to it. It also refers to a wider
range of „other environmental objectives, for example industrial pollution control, water
sanitation, or biodiversity protection. Mitigation and adaptation finance is specifically related to
climate change related activities: mitigation financial flows refer to investments in projects and
programs that contribute to reducing or avoiding greenhouse gas emissions (GHGs) whereas
adaptation financial flows refer to investments that contribute to reducing the vulnerability of
goods and persons to the effects of climate change."2
• Zadek and Flynn (2013): "Green finance is often used interchangeably with green investment.
However, in practice, green finance is a wider lens including more than investments as defined
by Bloomberg New Energy Finance and others. Most important is that it includes operational
costs of green investments not included under the definition of green investment. Most
obviously, it would include costs such as project preparation and land acquisition costs, both of
which are not just significant but can pose distinct financing challenges."3
• Pricewaterhouse Coopers Consultants (PWC) (2013): "For the banking sector, green finance is
defined as financial products and services, under the consideration of environmental factors
throughout the lending decision making, ex-post monitoring and risk management processes,
provided to promote environmentally responsible investments and stimulate low-carbon
technologies, projects, industries and businesses.
Blog » Definition of Green Finance By: Dr. Nannette Lindenberg
Definition of Green Finance By: Dr. Nannette Lindenberg
Definition of Green Finance
Dr. Nannette Lindenberg, April 2014
Green finance in the literature:
Up to today, we do not have a precise and commonly accepted definition of green finance for two
reasons. First, many publications do not try to define the term – for instance neither IFC (2013) nor
Spratt and Griffith-Jones (2013) include a definition of green finance1 – and second, the definitions
that are proposed vary significantly. Among the few definitions that can be found in the literature
are the following:
• Höhne / Khosla / Fekete / Gilbert (2012): "Green finance is a broad term that can refer to
financial investments flowing into sustainable development projects and initiatives,
environmental products, and policies that encourage the development of a more sustainable
economy. Green finance includes climate finance but is not limited to it. It also refers to a wider
range of „other environmental objectives, for example industrial pollution control, water
sanitation, or biodiversity protection. Mitigation and adaptation finance is specifically related to
climate change related activities: mitigation financial flows refer to investments in projects and
programs that contribute to reducing or avoiding greenhouse gas emissions (GHGs) whereas
adaptation financial flows refer to investments that contribute to reducing the vulnerability of
goods and persons to the effects of climate change."2
• Zadek and Flynn (2013): "Green finance is often used interchangeably with green investment.
However, in practice, green finance is a wider lens including more than investments as defined
by Bloomberg New Energy Finance and others. Most important is that it includes operational
costs of green investments not included under the definition of green investment. Most
obviously, it would include costs such as project preparation and land acquisition costs, both of
which are not just significant but can pose distinct financing challenges."3
• Pricewaterhouse Coopers Consultants (PWC) (2013): "For the banking sector, green finance is
defined as financial products and services, under the consideration of environmental factors
throughout the lending decision making, ex-post monitoring and risk management processes,
provided to promote environmentally responsible investments and stimulate low-carbon
technologies, projects, industries and businesses.