Abstract
(1) Background: Green finance standards have proliferated with much need for harmonization to accelerate global green financial flows. However, little is known on the nature of green finance standards that accelerates differentiation, rather than harmonization. Therefore, we embark to answer the question what the nature of green finance standards is and specifically how green finance standards have evolved in major economic systems driven by different actors and leading to differences and commonalities over time and environmental focus area. (2) Methods: To analyze the question, we build a model based on institutional and standards theory and apply text analysis and statistical methods to analyze 84 green finance standards issued from 1998 to 2020. (3) Results: we find clear evidence that green finance standards evolve depending on economic governance types (e.g., market-based, government-based and in weak institutional environments), environmental focus areas (e.g., pollution, climate, biodiversity) and depend on actors in government, intermediaries and developing financial institutions. We also show that this development has been dynamic over the last few decades. We further test and confirm three models of green finance standards: output-based, input-based and process standards that have evolved. With the findings, we aim to provide a better foundation for both research and policy in future green finance standard research, development and harmonization.
Highlights
To quantitatively test the hypothesis that green finance standards were published on different levels, we apply a goodness of fit test to analyze the predominant publisher of green finance standard in various economic governance settings
35 standards relate to China, relate to emerging markets, and relate to the European Union
While the Bali Action Plan highlighted the need for “innovative ways” and for mobilizing “private and public sector funding and investments, including facilitation of climate-friendly investments” already in 2007 [4], we find on the Green Finance Platform [23] that the proliferation green finance standards had been slow in the 1980 and 1990s and accelerated from 2010 to 2015 to about 17 measures per year
Summary
As an important foundation for the financial sector to support achieving the sustainable development goals (SDGs) and the Paris Agreement [1,2] through “the financialization of green development” [3,4], green finance standards have proliferated over the past few decades [2,5,6] This has led to competition of green finance standards, with claims of some countries or institutions to be most advanced in green finance standard setting, hoping for others to converge to their standards [7,8,9]
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