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Experiences and Lessons Learnt A Glimpse by RBF

The Financial sector going green is part of Reserve Bank of Fiji’s efforts in ensuring the financial sector is sustainable and is transitioning to a green economy. One of these
18 Nov 2018 12:44
Experiences and Lessons Learnt A Glimpse by RBF
Reserve Bank Of Fiji

The Financial sector going green is part of Reserve Bank of Fiji’s efforts in ensuring the financial sector is sustainable and is transitioning to a green economy.

One of these efforts is the Fiji Financial Sector Development Plan 2016–2025, which the RBF de­veloped in alignment with the government’s Na­tional Development Plan (NDP) and commitments to the Sustainable Development Goals (SDGs).

This was revealed in the Reserve Bank of Fiji’s Experience with Financial Inclusion and Climate Change publication that was published by the Al­liance for Financial Inclusion (AFI).

The NDP provides a framework for the RBF and other financial institutions to assess the sustain­ability of their operations and develop policies and strategies to better protect Fiji’s people and environment.

Fostering financial inclusion will strengthen the resilience of the poor and ease the transition to a low-carbon economy.

A few highlights from the publication is high­lighted below:

Reducing the financial sector carbon footprint Reducing the carbon footprint will effectively begin with the financial sector reducing its own carbon footprint.

The RBF has taken the lead by conducting an en­ergy audit of its day-to-day operations, including reviewing the use of paper and stationery, elec­tricity, lighting, air conditioning and electronic equipment.

The Bank has made changes to improve the ener­gy efficiency of its building and reduce waste, and if all financial institutions in Fiji were to follow suit this would contribute to mitigating reducing carbon emissions overall.

However, more needs to be done, such as devel­oping the ability to provide an energy efficiency rating, possibly through the Department of En­ergy.

Green financial products

Greening the financial sector also involves re­ducing the climate-related risks financial institu­tions are exposed to through lending and finan­cial service activities, including project finance, equity and debt underwriting.

Banks and licensed credit institutions, insur­ance companies, capital market and development finance institutions should all provide innova­tive, green financial products that cater to all sec­tors of society.

For example, banks can issue loans to businesses for renewable and energy-efficient technologies, green buildings, low-emission transport, waste reduction, water conservation, carbon abatement and sequestration projects, forestry and land re­habilitation, or provide financial services that support climate resilience and adaptation.

In 2012, the RBF issued a Renewable Energy Loan Ratio that required all commercial banks to hold two per cent of their deposits and similar li­abilities in loan to the renewable sector.

Green Bonds

Green Bonds are an important tool to finance the transition to a low-carbon and a climate-resilient economy.

Green bonds are fixed income, liquid financial Instruments that can be used to raise funds for climate mitigation, adaptation and resilience.

They enable financial institutions to offer a green investment portfolio and support projects that deliver direct environmental benefits to com­munities.

In 2017, Fiji became the first emerging market in the world to issue a green bond, raising 100 mil­lion Fijian dollars to finance government infra­structure projects aimed at climate change miti­gation and adaptation.

The RBF developed and implemented the entire policy framework for the green bond, which is aligned with the internationally approved Green Bond Principles.

With technical assistance from the World Bank and the International Finance Corporation (IFC), the RBF issued the green bond in the local capital market in October 2017.

The planned Sustainable Finance Roadmap will elevate RBF’s approach to a comprehensive regu­latory and policy framework that aligns Fiji’s na­tional strategies for financial inclusion, climate change, environmental conservation, social in­clusion and economic development. Streamlin­ing policies across all government ministries grappling with climate change will be essential, but will also require ongoing efforts from govern­ment players.

Areas of improvement

The technical capacities within the Bank to make policy, regulatory, investment and imple­mentation decisions still need improvement.

Green finance and climate financing are still rel­atively new subject areas for the financial sector, and the RBF will need to facilitate more knowl­edge sharing to help financial institutions devel­op their capacity to offer green financial products and services.

With programmes in place and regulatory and policy changes underway, the RBF is laying the foundation for a greener financial sector and a climate-resilient, low carbon economy. Although its work has only just begun, the RBF stands as an example of how to pursue financial inclusion in conjunction with a robust climate change re­sponse.

About AFI

It is a network of financial inclusion policymak­ers. AFI is led by its members and partners, cen­tral banks and other financial regulatory institu­tions from developing economies.

The AFI Network includes member institutions from more than 80 countries.

Feedback: anaseini.civavonovono@fijisun.com.fj

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