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Case Study | Green Finance Enterprise Project

Green Finance Enterprise Project

Research overview

This project worked with a data analytics company whose strategic mission is to apply data analytics to build point solutions for organisational challenges, building business specific insights and analytics solutions that can be used with minimal customisation and at an affordable price.

The main focus of this project was to identify available data and environmental information that can assist a specific project within green finance. Green finance is a new field in finance that has grown at a remarkable speed over the last five years. Financial experts and regulators are still working along many fronts to agree on clear definitions that ultimately will lead to robust well-recognised metrics that investors will use to evaluate how green their portfolio is.

How the research helps

For a smoother and successful transition to a green economy, financial investors are identified as key players. However, investors will assume risks that in order to be managed have to be firstly measurable.

This research sought to explore the development of a comprehensive green bonds database as well as preparing presentations on three specific sustainable sectors within the UN’s Sustainable Development Goal Framework (SDG) that were most relevant to the client’s enterprise project.

Impact

This research and subsequent report highlight the importance of a complete and comprehensive database including all types of green finance and green bonds that will be grouped according to different criteria to assist investors in their selection portfolio process.

The research considers existing green bond database providers and goes some way to identify recommendations, gaps and limitations for the development of a more comprehensive database that can be useful to potential investors who aim to increase the share of green investments inside their portfolio.

The data

The research explored what green bond databases are already available, how comprehensive they are and identified gaps and limitations.

As well as reviewing the data already available, the research sought to bring together a collection of relevant variables for each of the targets and its indicators within the three specific sectors.

The research

The research identified a number of relevant variables for three target areas classified by the Sustainable Development Goals (SDG) as set out by the UN, as well as indicators within those specific sectors.

The three SDG areas that the research focused on were: Affordable and Clean Energy; Cities; and Climate Action. The main characteristics that were considered include definitions, computation of simple formulas according to the indicators, notice of thresholds, identifying preliminary variables necessary for measuring the corresponding indicator, criteria of disaggregation/aggregation, gaps and limitations, data availability and other relevant references.

The research provides guidelines for what data sources can be potentially used for the creation of a database. However, some of the indicators cannot be used yet due to data unavailability or unclear definitions. Furthermore, the report highlighted that as the indicators are highly interlinked across the Sustainable Development Goals the process of mapping green projects to specific SDGs is tricky and may cause issues such as double counting when implementing advanced methodologies to measure the impact of green financing.

Report authors

Dr Diana Tunaru, University of Kent

Professor Radu Tunaru, University of Kent