Sustainable finance market sees surge in innovative products: Clifford Chance

Fatma Salah
3 Min Read

Clifford Chance, a premier legal firm, has released a report detailing the pivotal global trends in sustainable development for 2024, and the influence of environmental and social concerns on corporate operations, amidst ongoing shifts in sustainability governance.

The report, shared by Daily News Egypt, highlights the dynamic evolution of the sustainable finance market, fueled by the introduction of novel, diverse, and inclusive financial products.

Despite 2023 falling short in green bond issuances compared to the peak volumes of 2021, the report underscores the resilience and impact of the global bond market. It suggests that market trends should set ambitious, yet attainable targets.

It advocates for compelling incentives to boost green bond issuances and calls for detailed, multifaceted performance metrics, complemented by clear evaluation timelines.

The green loan sector also experienced a dip in financing during 2023, attributed to stricter lending criteria amid economic headwinds and greenwashing concerns.

The report forecasts an uptick in performance for the current year, driven by governmental reforms aimed at enhancing the green loan market, paralleling the attention given to green bonds.

At COP 28, delegates did not finalize a consensus on international regulations for carbon markets as outlined in the Paris Agreement’s Article 6. The resolution of these matters is deferred to COP 29.

Conversely, the conference marked progress in the voluntary carbon market. Entities like the Transparency Council for the Voluntary Carbon Market and the Voluntary Carbon Market Transparency Initiative, alongside regulators such as Vera and Gold Standard, unveiled collaborative efforts through a campaign underscoring the urgency of advancing carbon markets.

The report stresses the strategic importance of integrating carbon markets into specific energy sectors, particularly for bolstering the renewable energy market, which necessitates additional incentives for large-scale expansion in major projects.

In terms of legislative environmental frameworks, global policymakers have recently integrated environmental, social, and governance (ESG) criteria into their economic systems, aiming to reduce climate change risks and promote equitable trade.

In this vein, 2024 is poised to introduce a suite of new legislations and regulations that will standardize sustainability disclosures and establish benchmarks to evaluate corporate contributions towards sustainable development objectives, their efficacy, and avenues for enhancement.

The report also sheds light on the emerging trend of corporate reporting, emphasizing the need for uniform standards in disclosing non-financial information. Companies will be mandated to share their operations with stakeholders through dedicated reports, extending beyond conventional financial disclosures.

At the corporate and institutional level, continuous transparency in activity reporting will become obligatory. Firms must guarantee data precision, as inaccuracies could lead to legal scrutiny and erode client trust.

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