With the deterioration of the climate crisis, governments and organizations are increasingly putting green finance as a way to raise funds for sustainable projects and infrastructure.
However, although the investment in the industry is increasing, green finance is killed by low efficiency and irregularity, making it impossible to solve the huge funds needed for the environmental challenges faced by the world. A new block-based infrastructure is likely to change this system.
The urgency of introducing more investment into the green project is particularly prominent in Asia. Investment gaps in Southeast Asia, sustainable infrastructure projects are estimated to have $ 200 billion a year ago. If the region is to achieve its development goals, mobilize capital investment is crucial.
Green finance is becoming more complicated. However, as it becomes more complex, tracking capital flows and ensuring that investment reaches the expected destination more difficult. In addition, the impact of the project needs to pass this network feedback to ensure that government and investors understand the results.
Due to “green” definitions are constantly changing, interoperability is also proven to have problems. With countries where countries have developed their own project classification, measure and reporting methods, green finance may become a unconnected ecosystem that lacks compatibility countries.
This means that we need to conduct major changes to ensure that stakeholders receive the transparency required to rebuild the confidence of the industry. The block chain serves as a detrimentary data classification account shared in a system, which provides an uncharacted activity record. When applied to green finance, the block chain can solve data gaps and provide high quality data.
One of the main results of the UN Climate Change Conference last year is to call on financial institutions to incorporate emission assessments into their investment. The block chain system can be included in the monitoring and reporting process by incorporated into the basic sensor in the infrastructure project. Pairing these data from block chain databases, allowing bond issuers to get trackable, transparent real-time audit trails, record the environmental impact of their investment.
Asia is in a leading position based on the innovation of the block chain, coupled to the demand for promoting green finance, resulting in a recent wave of activities to embed the technology into the green ecosystem.
In Hong Kong, the International Clearing Bank Innovation Center is using distributed book technology to explore the green currency of green bonds. The program is called “Creative Project”, using block chain technology, intelligent contracts, and digital assets, real-time investment, and real-time tracking of environmental output. Digital technology embedded throughout the value chain cuts costs and time, producing a more efficient, tracked, and transparent process.
At the same time, Singapore is also using its growing expertise in block chain technology, strengthening its status as a green financial center. The Singapore Financial Authority has created a regulatory sandbox to provide the company’s approval space to trial technology-based green bond exchange.
If we need to alleviate the risk of changing climate, we need to change quickly. Block chain technology is likely to ease many challenges that hinder green finance. By providing transparency and traceability, this technology can help build trust in the industry and stimulate further investment.
In this field innovation, Asia is already leading the change. By supporting pilots and opening an open attitude towards experiments, the government provides an urgent need of driving. The next challenge is to encourage the size of the entire industry to use its benefits and promote international cooperation, which is critical to cross-market interoperability. If Asia wants to achieve its climate objectives, the government’s support from funds and regulatory perspectives will be critical.