Green Digital Finance and Sustainable Development Goals

Description

This book aims to fill the literature gap on digital instruments and FinTech in enhancing green finance. ​Technological innovation can increase transparency, accountability, and speed, decentralize the financial system, improve risk management, increase competition, lower costs, improve efficiency, increase cross-sectoral collaboration and integration, and scale up green finance. Artificial intelligence (AI), distributed ledger technologies (DLT) or blockchain, peer-to-peer lending platforms, big data, Internet-based and mobile-based payment platforms, Internet of Things (IoT), matchmaking platforms including crowdlending, tokenizing green assets are potential means to scale up the green finance for achieving the SDGs. The COVID-19 pandemic, the economic downturns, and the uncertainties shrank the new investments in renewable energy projects globally. Low investment in renewable energy projects could threaten the expansion of green energy needed to provide energy security and meet SDG7 and SDG13. Investments in renewable energy projects are scarce because of several risks and a low rate of return. Although several new green financing solutions such as green bonds, green banks, green credit guarantee, carbon taxation, carbon trade, village funds, and community trust funds have been established in different countries, these are insufficient, and alternative ways to finance projects are required. The book provides several high-quality studies on utilizing digitalization, FinTech, financial innovations, and other new technologies to fill the finance gap of green projects to meet the SDG goals. The chapters are written by scholars in diverse countries and regions and include practical policy recommendations. Acknowledgments Introduction Contents About the Editors Part I Prerequisite for Facilitating Green Digital Financing 1 Regulatory and Legal Framework for Promoting Green Digital Finance 1.1 Introduction 1.2 Historical Background and Synergy with the United Nations Agenda 1.3 The Concept of Green Digital Finance 1.4 Regulation and Policy Framework of Green Digital Finance 1.4.1 Digital Ecosystem/Platforms 1.4.2 Machine Learning and Artificial Intelligence 1.4.3 Big Data 1.4.4 Blockchain Technology and Cryptocurrency 1.4.5 Internet of Things 1.5 Major Stakeholders of the Regulatory and Policy Framework 1.5.1 Private Sector and ESG Reporting 1.5.2 International Framework and Response to Green Digital Finance 1.6 Private Initiatives and Frameworks on Green Digital Finance 1.6.1 Green Digital Finance Alliance (GDFA) 1.6.2 The Network of Central Banks and Supervisors for Greening the Financial System (NGFS) 1.6.3 The International Capital Market Association (ICMA) 1.6.4 Financial Centres for Sustainability (FC4S) 1.6.5 International Development Finance Club (IDFC) 1.6.6 National Efforts 1.7 Conclusion and Policy Direction 1.7.1 Clarity of Concept/Taxonomy/Standardization 1.7.2 Data Collection—Information Symmetry 1.7.3 Addressing Potential Regulatory Risks and Challenges 1.7.4 Mitigating the Risk of Green Digital Finance 1.7.5 International Convergence/Platform 1.7.6 Advocacy and Capacity Building 1.7.7 Consumer Protection References 2 Current State of Green Digital Financing and the Associated Challenges 2.1 Introduction 2.2 The Importance of Digitalization in Green Finance 2.2.1 Benefits of Digitalization on the Various Stages of Green Lending 2.3 Overview of Common Digital Practices Adopted by Green Finance 2.3.1 Big Data, Machine Learning, Artificial Intelligence, and Cloud Computing 2.3.2 Mobile Money for Easy Payments with or without a Banking Account 2.3.3 Peer-to-Peer Lending and Crowdfunding Platforms Supporting Green Digital Financing 2.3.4 Blockchain Technology Offering Secure and Transparent Transactions Enables Innovative Solutions to Green Financing 2.4 Challenges Associated with Financing the SDG 2.5 Challenges Associated with Green Digital Financing 2.5.1 Fintech’s Risks and Unintended Consequences 2.6 Policy Recommendations to Scale Green Digital Financing 2.7 Conclusions References 3 Assessing the Risks Associated with Green Digital Finance and Policies for Coping with Them 3.1 Introduction 3.2 Scope of Green Digital Finance Applications 3.3 Environmental Risks 3.3.1 Risks 3.3.2 Solutions 3.4 Crypto Asset-Related Risks 3.4.1 Risks 3.4.2 Solutions 3.5 Alternative Finance Risks 3.5.1 Risks 3.5.2 Solutions 3.6 Risks Related to Automated Investment Advice 3.6.1 Risks 3.6.2 Solutions 3.7 Crime-Related Risks 3.7.1 Risks 3.7.2 Solutions 3.8 Conclusions and Policy Recommendations References 4 Role of Governments in Enhancing Green Digital Finance for Meeting the SDGs 4.1 Introduction 4.2 Challenges in Digital Finance-FinTech and Potential of Green Digital Finance 4.2.1 The Benefits of Finance Technology 4.2.2 The Challenges in Digital Finance-FinTech to Unlock Green Finance 4.2.3 Potential Impacts of Green Digital Finance 4.3 Challenges of Green Digital Finance and Industry Responses 4.3.1 The Challenges of Green Digital Finance 4.3.2 Industry Responses to the Problems of Green Digital Finance 4.4 Priorities in Policy Responses to the Problems of Green Digital Finance 4.4.1 Theoretical Context 4.4.2 Primary Government Actions to Promote Green FinTech 4.5 Conclusion and Policy Recommendations References Part II Recent Progress in Green Digital Finance in Asia and Europe 5 Identification of Critical Success Factors for Developing the Green Digital Financing Market in Iran 5.1 Introduction 5.2 Literature Review 5.3 Research Methodology 5.4 Empirical Findings and Discussions 5.4.1 TAM Results 5.4.2 ISM Results 5.5 Conclusions and Policy Recommendations References 6 Developing FinTech Ecosystems for Voluntary Carbon Markets Through Nature-Based Solutions: Opportunities and Barriers in ASEAN 6.1 Introduction 6.2 The Scope for Nature-Based Solutions in ASEAN 6.2.1 Nature-Based Solutions as a Tool to Mitigate the Environmental Impact of Industrial Activities 6.2.2 Carbon Credits Generated by Nature-Based Solution 6.2.3 Potential Environmental Assets That Could Produce Carbon Credit in the Region 6.3 Challenges and Opportunities with the ASEAN NBS Carbon Market 6.3.1 Barriers to Unlock the Potential of ASEAN NBS Carbon Market 6.3.2 NBS Carbon Market Initiatives in ASEAN and Singapore CIX 6.3.3 Fintech Opportunities in Carbon Exchange Markets and Providing NBS Offsetting Capacity 6.4 Technology Landscape for Carbon Trading Exchanges and Offsetting Mechanisms from NBS 6.4.1 Technology Utilization for Carbon Trading 6.4.2 Geospatial Analytics: Spatial Data Collection Using Satellite Images 6.4.3 Green API and Open Data for Carbon Offset 6.4.4 Using AI for Carbon Pricing 6.4.5 B2B Transaction Management by Establishing Carbon Exchanges Through Blockchain Technology and Others 6.4.6 Startup and FinTech Business Models Operating in VCMs Based on NBS 6.5 Policy Implications 6.5.1 Barriers: Creating an Ecosystem with the Right Infrastructure, Regulation, Innovation, and Human Resources 6.5.2 Pricing and Monetization Challenges 6.5.3 Technology and Cross-Nation Interoperability Challenges 6.6 Conclusion References 7 Facilitating Green Digital Finance in Bangladesh: Importance, Prospects, and Implications for Meeting the SDGs 7.1 Introduction 7.2 Importance of Green Digital Finance 7.2.1 Existing Literature 7.2.2 Bangladesh Context 7.3 Green Financing in Bangladesh: Some Stylized Facts 7.3.1 Total Direct Green Finance 7.3.2 Bangladesh Bank Refinance Scheme 7.3.3 Share of Green Finance by Category 7.4 Case Studies 7.4.1 Switzerland 7.4.2 Netherlands 7.4.3 Germany 7.4.4 South Africa 7.4.5 China 7.4.6 Kenya and Brazil 7.4.7 Lessons Learned 7.5 Facilitating Green Digital Finance in Bangladesh 7.5.1 Government and Governance 7.5.2 Involuntary Penalties 7.5.3 Cyber Security 7.5.4 Microfinance Issue 7.5.5 Collaboration Process 7.6 Conclusion and Policy Recommendations References 8 The Role of Green Digital Finance in Achieving Sustainable Development Goals in China’s Belt and Road Initiative 8.1 Introduction 8.2 Global Environmental Governance 8.3 Sustainable Development Goals and the BRI 8.4 Green Digital Finance 8.5 Central Bank Digital Currency 8.6 Role of Technology Companies and Banks 8.7 Performance 8.8 Policy Recommendations 8.9 Conclusion References 9 Microenterprises, Financial Innovation and Green Practices: Qualitative Case Studies from Finland 9.1 Introduction 9.2 Cases Studies 9.3 Bankify 9.3.1 Business Focus 9.3.2 Financial Innovation 9.3.3 Green Practices 9.3.4 Services by Bankify 9.3.5 Use Cases of Bankify’s Services 9.4 Cooler Future 9.4.1 Business Focus 9.4.2 Financial Innovation 9.4.3 Green Practices 9.5 ReceiptHero 9.5.1 Business Focus 9.5.2 Financial Innovation 9.5.3 Green Practices 9.6 Conclusions and Policy Implications References 10 Analytical Assessment of Green Digital Finance Progress in the Republic of Georgia 10.1 Introduction 10.2 Green Digital Finance in Georgia 10.2.1 Green Digital Bonds and Securities 10.2.2 E-Money 10.2.3 Cryptocurrencies 10.3 Conclusion and Policy Recommendations References 11 Mapping the Current Practices and Patterns of Green Digital Finance in India and the Way Forward 11.1 Introduction 11.2 Status of Green Digital Finance in India 11.2.1 Investment Requirements 11.2.2 Green Digital Finance Infrastructure in India 11.3 Practical Applications of Green Digital Finance in India 11.4 Green Digital Financing in India Challenges and Barriers 11.5 Solution to Challenges 11.6 Role of Green Digital Financing on Green Growth Indicators 11.7 Green Digital Financing—A Step Toward Sustainable Development Goals 11.8 Conclusion and Policy Implications 11.8.1 Policy Implications 11.9 Annexure References 12 Current Status and Challenges of Green Digital Finance in Korea 12.1 Introduction 12.2 Green Digital Finance 12.2.1 Digital Finance 12.2.2 Green Finance 12.2.3 Green Digital Finance 12.3 New Deal Policy and Green Finance in Korea 12.3.1 Digital New Deal 12.3.2 Green New Deal 12.3.3 New Deal Fund and Green Finance in Korea 12.4 Conclusion and Policy Recommendations References Part III Role of FinTech and Financial Innovations in Scaling up the Green Digital Finance 13 Distributed Ledger Technology and Climate Finance 13.1 Introduction 13.2 Distributed Ledger Technology 13.2.1 Technological Background 13.2.2 Sustainability Initiatives and Networks 13.3 DLT-Based Applications in Climate Finance 13.3.1 Decentralized Finance 13.3.2 Asset Management 13.3.3 Measurement, Reporting and Verification 13.3.4 Tokenization 13.3.5 Other 13.4 Conclusion and Policy Implications Appendix References 14 The Potential Role of Fintech and Digital Currency for Islamic Green Financing: Toward an Integrated Model 14.1 Introduction 14.2 FinTech, Digital Currency, and Green Finance 14.3 Examples of FinTech and Digital Currency for Green Financing 14.4 Concept and Importance of Islamic Green Finance 14.5 Traditional Islamic Contract for Green Finance 14.6 Literature of FinTech, Digital Currency and Islamic Green Finance 14.7 Proposed FinTech and Digital Currency for Islamic Green Financing 14.8 Significance and Challenges of Proposed Integrated FinTech and Digital Currency for Islamic Green Financing 14.9 Conclusion and Preliminary Policy Recommendations References 15 A Framework for Digitizing Green Bond Issuance to Reduce Information Asymmetry 15.1 Introduction 15.2 Literature Review 15.2.1 Asymmetrical Information in Conventional and Green Bonds 15.2.2 Green Bonds in Blockchain 15.3 The Framework of Green Bonds Issuance Based on Blockchain Technology 15.3.1 Participants in a Green Bond Market 15.3.2 The Process of Green Bonds Issuance 15.3.3 Smart Contract of Green Bond 15.3.4 Security of Green Bonds 15.4 Digitalization of Green Bonds to Minimize Information Asymmetry 15.5 Discussion 15.6 Conclusion and Policy Recommendations References 16 Role of Banks and Other Financial Institutions in Enhancing Green Digital Finance 16.1 Introduction 16.2 Greening of the FinTech Landscape 16.3 Challenges 16.4 Opportunities 16.4.1 Green FinTech in Banks and Other Financial Institutions 16.4.2 Behavioral Nudging to Push Demand 16.4.3 Targeting the Bottom of the Pyramid with Microfinance Institutions 16.4.4 Promoting Impact Investing 16.4.5 Blockchain for Financing 16.4.6 Blockchain for Data 16.4.7 Artificial Intelligence as a Credit Facilitation Tool 16.4.8 Embedding SDG Data 16.5 Recommendations 16.5.1 For Banks and FIs 16.5.2 For FinTech Service Providers 16.6 Conclusion and Policy Recommendations References 17 Roles and Tasks of Peer-to-Peer Lending Platforms in Activating Green Finance 17.1 Introduction 17.1.1 Background and Concept of Emergence of P2P Lending Platforms 17.1.2 Comparison Between P2P Lending and Crowdfunding 17.2 Korea’s P2P Lending Platform Status and Legal System 17.2.1 Status of P2P Lending Platforms in Korea 17.2.2 Comparison of Overseas P2P Lending Brokerage Platform Models 17.2.3 Overview of the Online Investment Linked Financial Business Act 17.3 Advantages and Disadvantages of P2P Lending Platform for Activation of Green Finance 17.3.1 Advantages of P2P Lending Platform 17.3.2 Disadvantages of P2P Lending Platform 17.4 Role of P2P Lending Platform for Activation of Green Finance 17.4.1 Causes of Sluggish Greenhouse Gas Reduction and the Traditional Financial Industry 17.4.2 Issuing Green Bonds Through Digital Platforms 17.4.3 Financing of Eco-Friendly Startups 17.4.4 Construction of Green Industry Big Data Through P2P Platform 17.4.5 Examples of P2P Lending Platform for Activation of Green Finance 17.5 Challenges of P2P Lending Platforms for Activation of Green Finance 17.6 Conclusion and Policy Recommendations References