Green finance refers to financing and investment activities that benefit the environment and further sustainable development. These benefits include the reduction of air, water and soil pollution, reduction of greenhouse gas emissions, more efficient use of resources and mitigation of climate changes.
Green finance facilitates a shifts towards a greener economy through market-based financial incentives. Financial institutions such as banks, for example, can increase their financing capacities for green industries, and government authorities can incorporate more financial facilities for these industries into their policy-making. Green finance can be realised in the form of various products such as green credit, green bonds, green investment funds, green insurance, green securities funds, as well as carbon trading, carbon assets and carbon derivatives.