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Green bonds also have the potential to revolutionise infrastructure spending by connecting regional or domestic needs with a ready investor base. Much if not all of the world’s infrastructure spending will require green provisions if the Intended Nationally Determined Contributions (INDCs) agreed in Paris are to be realised, and green bond issuance could finance everything from the EU Energy Union to Indian smart cities and UK housebuilding. Put simply, the two-degree ceiling is being taken seriously and financiers are willing to undertake the heavy lifting necessary to meet or even beat it. The City of London Corporation – the body responsible for running London’s Square Mile – believes passionately that this sector represents one of the industry’s best prospects, and in January launched its Green Finance Initiative, which I am delighted to chair, and designated 2016 the ‘‘year of green finance’’.Developed in partnership with HM Treasury and the Department of Energy and Climate Change, the City Corporation’s initiative pools international expertise and is intended to promote the sector’s development, strengthen market infrastructure and advocate specific regulatory and policy changes that might better channel funding toward green projects. The initiative has since convened a number of major fora with both international and domestic stakeholders, and is in the process of surveying FTSE 100 constituents and major financial institutions; investigating creation of a green dispute resolution service; promoting and enhancing municipal authorities’ access to green finance; and convening a series of green infrastructure, investor and accreditation workshops. We intend to better quantify the market’s challenges and opportunities, and to enhance the sector’s development globally.The sector’s growth has raised an obvious question – what is green? The answer differs enormously by geography, reflecting the fact that each nation’s journey toward carbon neutrality is bespoke and that even domestically one investor’s green parameters may differ from another. Many emerging markets also operate on a longer time-frame for reducing emissions than Europe, and even neighbours will disagree about the role of nuclear energy or the acceptability of clean coal. As long as the financial products facilitating this transition are transparent and properly accredited, however, investors can choose for themselves the assets that best suit their green mandate, and the market will price instruments accordingly.Green finance is no fad. Asset owners everywhere – from pension holders to sovereign wealth funds – are increasingly looking for sustainable investments, and those who once passively divested of high-carbon assets are now actively seeking to learn about and obtain low-carbon products. That is why it is so important that organisations like the G7, G20, the UN and others continue the work begun in Paris. By laying out the investment opportunities associated with national energy and climate change commitments, institutional and even retail investors will obtain the certainty they need to begin facilitating the transition toward carbon-neutrality.The City of London Corporation has developed a reputation in recent years for promoting and developing emerging sectors, from renminbi internationalisation to Islamic finance and fintech development. It is concerned with the interests of the whole financial industry, whether it is based in London or not, and believes the green finance sector will be best serviced by a collaborative approach rather than a competitive one. Indeed, the work of the Green Finance Initiative is by no means confined to the UK – it comprises leading financial institutions from around the world, and we are determined to encourage development of the green finance sector on a truly global scale. Raising capital for green projects, investing savings in low-carbon infrastructure and facilitating the implementation of the Paris Agreement – these are the contributions the global financial sector can make in the drive toward a carbon-neutral economy. In recent years the industry has perhaps been too cautious to admit it, but global capital markets have the capacity to enact fundamental economic change; and that is precisely what the green finance sector might do. ■ABOUT THE AUTHORSir Roger Gifford is the Chairman of the City of London’s Green Finance Initiative. He is also the UK Country Head of SEB, based in the City of London, and began his career in the financial sector at S.G. Warburg & Co before joining Enskilda Securities, then a subsidiary of SEB, in 1982. Prior to his appointment as Head of SEB London in 2000, he headed the bank’s operations for six years in Japan. He has worked in the primary debt and equity capital markets most of his career.Sir Roger is Vice Chairman and a past Chairman of the Association of Foreign Banks in London, President of the Bank Workers Charity and a Non-Executive Director of Multrees Investor Services. He was Lord Mayor of the City of London in 2013 and was knighted in the 2014 New Year Honours for services to international business, culture and the City.Pictured: Sir Roger GiffordFINANCE AND INVESTMENT 055