The Standards Council of Canada (SCC) is seeking feedback from relevant stakeholders on the International Organization for Standardization’s (ISO) new work item proposal for the development of new standards on Green Finance: Assessment of Green Projects. All responses submitted to SCC will serve to generate a Canadian position on the proposal.
Purpose and justification for new field of activity
Green finance generally refers to the financing of environmentally sustainable technologies, projects, industries and businesses. Green finance investments provide benefits by, for example, reducing pollution or improving energy efficiency. Green finance could also facilitate the growth of high-potential green industries, promote technological innovation and create business opportunities for the financial industry. The green finance market has a rapid growth recently. In 2015, global investment in energy efficiency was USD 221 billion and in renewable energy was USD 442 billion.
Meanwhile, the development of green finance faces general challenges. There is no universally accepted definition of green financial activities, either internationally or even at the country or market level. As most green financial activities are based on projects, it is difficult to allocate financial resources, manage risks, evaluate progress, understand impact, communicate information and design policy and regulations without appropriate definitions and classifications of green financial projects. There are no common guidelines for assessing green financial projects before investment decisions. Therefore, financial institutes have difficulty to technically identify and assess the green financial projects. It also weakens the credibility of the assessment by the third-party bodies. The lack of standard in such areas can result in overinvestment in pollution intensive sectors and underinvestment in green sectors. Therefore, the market needs are urgent for international harmonized definitions and guidelines to avoid investor confusion.
This International Standard will provide a universal definition and classification of green financial projects based on international consensus and best practices. The harmonized definition and classification will avoid the danger of not adequately reflecting different contexts and priorities in different countries or markets as well as costly comparison across institutions and markets and for cross-border green investment. This International Standard will also provide a comprehensive framework for assessing green financial projects. Considering many financial institutes have yet to develop the capacity to identify and assess green financial projects, this framework can increase the confidence in green financial projects as it can be assessed by financial institutes or third-party bodies on a common basis.
It is necessary for policy makers, international organizations and the private sector to work together to develop a voluntary standard for classifying and assessing green financial projects. This standard may help investors, firms, governments and the general public to identify projects, mitigate risk, understand impact and mobilize capital for green investment. This could help level the playing field within and among countries, and provide the foundations for scaling up green finance globally.
Scope of proposed technical activity
This International Standard specifies the classification of green financial projects. This International Standard also specifies a framework for assessing green financial projects, including principles, scope, methodologies, procedure, reporting and assessment bodies. This International Standard helps users to identify and assess green financial projects.
Stakeholders are invited to consider the following when formulating a response:
- Do you agree to the proposal?
- If yes, why, and do you wish to participate should a mirror committee be established?
- If no, why not?
Deadline for survey submission
SCC values your feedback on this proposal. Please fill out the stakeholder feedback form at https://scc.sondages-surveys.ca/s/green_finance/ no later than August 29, 2017.
For more information, please contact Suzanna Ersoy, Program Manager, ISO, SCC, at email@example.com.
SCC is a federal Crown corporation with the mandate to promote efficient and effective standardization in Canada with the goal of enhancing Canada’s economic competitiveness and social well-being. It also accredits standards development and conformity assessment organizations. For more information on SCC’s programs, visit www.scc.ca or email firstname.lastname@example.org.