Connect with us

Green Planet

Promoting Green Finance in Qatar: Post-Pandemic Opportunities and Challenges

Published

on

The recent COVID-19 pandemic had significant implications for both national economies and the global financial system, in addition to hindering the achievement of the sustainable development goals agenda. The UNDP estimates global human development—a combination of education, health, and living standards—could fall this year for the first time since 1990, which highlights how the effects of the pandemic present both an enormous challenge and tremendous opportunities for reaching the 2030 Agenda and the Sustainable Development Goals (SDGs).

With the additional challenges arising from climate change, governments have committed to several policy measures which promote a green recovery to rebuild their economies, while benefiting the people and the planet. The Organisation for Economic Co-operation and Development (OECD) estimates that the public resources committed by governments to support a green recovery amount to at least USD 312 billion. These measures present tremendous opportunities for green finance in general, and Islamic green finance in particular, in the context of Muslim-majority countries.

The State of Qatar, in light of its National Vision 2030 and in order to enhance the diversification of its economy away from hydrocarbon, has taken several measures to mitigate climate change. These include increasing the use of solar energy to more than 20% of its energy mix by 2030, the optimal use of water, improving air quality, waste recycling, increasing green spaces, in addition to the country’s commitment to organizing the first “carbon neutral” tournament featuring the use of solar-powered stadiums and water and energy-saving cooling and lighting technology. The State is also a signatory of the Paris Agreement on Climate Change and supports a number of global initiatives in relation to climate change mitigation.

All these initiatives could be funded via green finance. In this regard, there are four global trends in the financial industry that the State of Qatar can leverage to promote green finance for green recovery:

Growth of SRI and ESG awareness:

Socially responsible investing (SRI) and environmental, social, and governance (ESG) investing are two of the fastest growing investing areas globally. Both are driven by the increasing awareness of social and environmental responsibility. According to the Global Sustainable Investment Alliance, global sustainable investment reached $30.7 trillion in the five major markets at the start of 2018, a 34 percent increase in two years. These include Europe, United States, Japan, Canada, Australia, and New Zealand. Developing green finance instruments and products can attract a growing SRI investor base that seeks to align social and environmental values with its investment portfolios.

Upward trend of Islamic Finance:

According to the Islamic Financial Services Board (IFSB), the total worth of the Islamic Financial Services Industry across its three main segments (banking, capital markets, and takaful) is estimated at $2.44 trillion in 2019, marking a year-on-year 11.4% growth in assets in US dollar terms. According to Thomson Reuters, the industry is projected to reach $3.8 trillion by 2022. Qatar is one of the global Islamic finance hubs with Islamic finance assets representing more than 20% of the local financial system’s assets. With the recent development of Islamic green finance, Qatar has the opportunity to position itself as a sustainable finance leader in the region by promoting synergies between Islamic and green finance growing markets.

Financial innovation for sustainability:

The United Nations Conference on Trade and Development (UNCTAD) highlights that achieving the Sustainable Development Goals (SDGs) will take between $5 and $7 trillion, with an investment gap in developing countries of about $2.5 trillion and the additional net investment required to implement renewable energy solutions standing at $ 1.4 trillion, or about $100 billion per year on average between 2016 and 2030, according to the International Renewable Energy Agency (IRENA). Mitigating this funding gap requires an engaged private sector to make green investments. That is why several green instruments and products were developed across the various segments of the financial industry. These include green retail banking products, including green loans and green mortgages, green corporate and investment products, green project finance, and green venture capital and private equity, as well as green capital market instruments, like green investment funds, green bonds, and sukuk.

Integration of sustainability objectives into national strategies:

Several governments around the world have integrated sustainability objectives and green finance roadmaps into their national strategies, either through a top-down approach, whereby green finance frameworks and taxonomies are harmonized at the country level (as with China), or via market-led collaborative actions. In addition, to overcome private sector investment barriers, such as high up-front costs, long investment timelines, and higher perceived risks, several countries have put in place incentives in the form of subsidies and tax exemptions. The State of Qatar can leverage these experiences through collaborations and partnerships to develop a unique green finance model in the region

Green Sukuk: A Fast Growing Market

Green sukuk is an innovative instrument for financing green infrastructure. It has the potential to become a new asset class targeting both Islamic and socially responsible investors.

Since the issuance of the first green sukuk in 2017 in Malaysia, the market has grown significantly, with twelve issuers in Indonesia, Malaysia, and the United Arab Emirates tapping the market, in addition to the Islamic Development Bank. About $7.6 billion in four currencies (EUR, IDR, MYR, and USD) was raised up to September 2020, with tenors ranging from two to 21 years. The amounts raised were allocated to green construction, energy efficiency, and clean transportation projects.

Promoting Green Finance in Qatar

Although the green finance market is still in an early stage of development in the country, the market has witnessed several initiatives by local institutions that might pave the way to the development of a more dynamic market. In September 2020, Qatar National Bank (QNB) issued the first ever green bond in Qatar, a $600 million tranche, under its MTN Program, with a maturity of five years under its established Green, Social, and Sustainability Bond Framework.

In addition, Qatar Stock Exchange (QSE) introduced an ESG Guidance in 2017 to assist listed companies wishing to incorporate ESG reporting into their existing reporting processes.

While Bond and sukuk issuance in Qatar reached $28 billion in 2019, the market is largely driven by government issuance and commercial banks for corporate issuances, with the exception of Ezdan Sukuk in 2016 and 2017. The development of green sukuk in the country with the enabling ecosystem could facilitate corporate sukuk issuance, thus enhancing market liquidity.

In conclusion, promoting a green recovery in line with the country’s economic diversification objectives and climate mitigation strategies will require the development of an enabling ecosystem for the development of green finance in Qatar. Developing a pipeline of bankable green projects at the country level, market awareness, and promoting synergies between Islamic and green finance will provide the basis for further innovation and policy action, such as green labels, frameworks, and incentives.

Dr. Dalal is Assistant professor of Islamic finance at Hamad Bin Khalifa University (HBKU). She was previously a visiting academic at the Durham Centre for Islamic Economics and Finance, Durham University Business School and a visiting lecturer in a number of international universities. Dr. Aassouli worked at the International Islamic Liquidity Management Corporation in Malaysia where she assisted with the establishment of the IILM's sukuk programme. Before that she held several positions in Europe where she had exposure to the African, European and Latin American markets. Dr. Dalal holds Masters from NEOMA Business School, and Paris Dauphine University and a Ph.D. from ENS de Lyon in France. Her areas of research interest include Islamic finance in general and its implications for corporate finance, ethical finance, development finance, green finance, sustainable development and socially responsible investing

Continue Reading
Comments

Green Planet

Global Environmental Governance and Biden’s Administration

Published

on

Being the largest emitter of greenhouse gas in the world, it is the responsibility of U.S to contribute expeditiously to manage the environmental issues at domestic and international level but the previous government, under the leadership of Trump, took back seat and reversed all the decisions of Ex-president Barack Obama to combat the climate change. Unlike this, New Elected President, Joe Biden, who is very enthusiastic and firm to fulfill all the promises regarding climate change which were done during the general election’s campaign. Moreover, he views climate change a thwart to national security. One of the biggest achievements associated with Biden’ administration regarding environmental issues is to bring U.S back into Paris Climate Accord and brought executive order’’ Protecting Public Health and the Environment and Restoring science to tackle the climate crisis’’ on the surface.

A flurry of changes to U.S environment policy is going to play a constructive role in global environmental governance under Biden administration. Even before elections, climate change was one of the top priorities and aimed to put the U.S on a path which leads towards ‘’ Zero Net’’ greenhouse gas emission. In the very early of His office days, He is very committed to deal with the climate change as they hosted ‘’ Climate Day’’ to introduce government climate centric approach to emphasize on the climate change.  Biden administration also ordered to revoke a permanent issued for Keystone XL oil pipeline which trump issued for extraction of oil and energy which is dangerous to national ecosystem. In addition to this, they are also very active to promote US role to tackle the climate change at domestic and abroad. At domestic level, Biden’s actions are speaking louder than the words as he has ascribed the climate crisis with a national emergency. At the time of his inauguration, Biden said: ‘’ A cry for survival comes from the planet itself, a cry that can’t be any more desperate or any clearer’’. He also directed his cabinet to work on the policy of ‘’ social carbon cost’’ to measure the cost of actions and how costs will impact the climate change. He endeavors to control the climate change by keeping a strict eye on the big project’s reviewing process before working under the National Environmental Policy Act which calculates the social costs of greenhouse gas emissions.

On international level, Biden has been striving to improve the spoil image shaped by the previous government regarding global environmental governance as he has declared to rejoin the Paris Climate accord which would help to reduce the greenhouse gas emission. In the result of this action, Biden was welcomed by the General Secretary of the United Nations and French Prime Minister Emmanuel Macron by saying ‘’ Welcome Back to the Paris Agreement’’. Moreover, Biden Administration is very determined to convene a global climate summit on the earth day to encourage leaders to align themselves with scientist to alleviate the impacts of climate change. On international forums, US need to cooperate and compel the economic trade partner to take actions to combat with climate crisis. One of the essential steps taken by the Biden administration is to manage the climate refugees which aim to make strategies to compensate the climate affected migrants.

The thin majority of democratic in the senate does not only limit the possibility for Biden to achieve climate change reforms along strong anti-climate lobbyist business group who are inimical to the reforms particularly relevant to vehicle, power plants and oil and gas drilling industries. Without new climate legislation from congress, it would be not an easy task to implement the climate agenda across the borders. The vocal resistance comes from the coal production sectors which result in burning of fossil fuels and caused of greenhouse gas emissions. Whereas, few sectors are opposing the agenda there are also companies specially electrical vehicles are exclusively offering assistance to Biden for the sustainable development. Undoubtedly, environmental organizations and scientists community applauded the Biden decisions but few business groups have also filed a lawsuit against Biden to not stop the new permit for oil and gas drilling. There are also concerned raised by the community that climate actions will delete many jobs and cause of upsurge in unemployment percentage across the federation.

It is very evident from the ambitions of Biden’s action regarding climate crisis that he is very interesting to mitigate and curb the climate change but it will require highly comprehensive strategy aims to manage the reforms in laws while taking congressmen in confidence because most of them are not in favor of climate actions due to clash of interests. On the other hand, there is need to work on renewable energy resources at domestic and international level and for this US should compensate the companies to compete with the old capitalized firms which do not want safe and peaceful planet. Moreover, there is need to bring reforms in existing environmental treaties and their compliance process which should be strictly followed by the harsh actions against the violators. The process of financing the agendas which are very environment friendly and transforming the resources to the periphery states should be done swiftly to improve the environment across the globe. The aims of achieving sustainable development should be promoted and supported by the US across the world.

Continue Reading

Green Planet

EU-Asian Partnerships are necessary to prevent the next pandemic

Published

on

forest

COVID-19 has demonstrated the vulnerability of global supply chains and revealed the ever-increasing ecological dangers of industrial expansion, which has amplified the risks of diseases migrating from animals to humans. This is demonstrated in a new report launched by UN Secretary-General Antonio Guterres which argues that to prevent future pandemics the world must cooperate to addresses interlinked challenges presented by biodiversity, pollution and the climate crises. The UN chief encouraged everyone to use the report to “re-evaluate and reset our relationship with nature”. 

 This is precisely the time for countries in the European Union (EU) to re-evaluate their trade relations with producer nations in order to protect local environment and prevent deforestation.

The relationship between deforestation and public health and cannot be denied. Unfortunately, in recent years the EU’s economic model has not paid sufficient attention to sustainability, trade and global forest management. So far, the EU’s approach to trade has ended up alienating the most important areas of biodiversity in Asia, while emboldening some of the biggest despoilers of biodiversity and polluters in the Americas. 

The Konrad Adenauer Foundation, the leading think-tank of Germany’s ruling political party, has published its own  report  on how EU policies have unfairly targeted Asian commodities by fostering  protectionist market dynamics which harm the environment.

In one case in point, the EU initiated a ban on the import of palm oil from 2030, as a means to reduce  deforestation in Asia. However, scientific evidence actually indicates that sustainably cultivated palm oil is far better than other seed oil alternatives – rapeseed, coconut, soy and sunflower. Those commodities need up to ten times more land to produce the same amount of oil. Therefore, instead of halting deforestation, the ban simply transfers the effects of ecological degradation elsewhere – namely within the EU on the back of domestically produced commodities.

Meanwhile the EU continues to import beef and soy, the top two contributors to deforestation globally. In fact, beef production requires more than double the forest land than for the production of soy, palm oil, and wood products combined. Land clearing for beef and soy production in the Amazon has reached a 12 year high, leading scientists to warn of an irreversible ‘tipping point’  that could mean huge drought, forest death, and release of great amounts of stored carbon to the atmosphere.

As the Konrad report indicates, the move to ban palm oil while maintaining beef and soy imports is a double standard that has created a trust gap between the EU and ASEAN nations. This has inhibited collaborative efforts to combat deforestation as EU policies exclude ASEAN nations from important sustainability debates. Moreover, the EU ban does nothing to cease palm oil production. Producer nations will continue to produce without adhering to EU environmental standards and regulations. This will spell disaster, not only for the diverse wildlife found in Asia’s tropical forests, but for humanity’s public health – a correlation which cannot be divorced from the economy.

If the EU sought out a trade deal with ASEAN then it could integrate mandatory sustainable standards and enforce regulations to produce sustainable palm oil and limit deforestation.  The EU could also work with existing schemes like the Malaysian Sustainable Palm Oil (MSPO) standard, which purportedly meets the EU’s key sustainability criteria and is the standard against which almost 90% of Malaysian palm oil is now produced.

This is an example of how the EU has overlooked Asian success stories in creating adaptable blueprints through strict and proactive measures which have largely kept the virus at bay and allowed their economies to stay afloat. While Europe’s economy is only expected to grow by 3.7% in 2021, ASEAN nations are predicted to rebound over 6%.

That means we could have the best of both worlds; trade that opens up two powerhouse regions to a new era of economic vitality and cooperation – underpinned by ecological conservation through an unfailing commitment to protect pristine ecosystems, exotic wildlife and precious forests.

 The EU should use the lessons of the pandemic to capitalize on its environmental goals, working with producer nations to ensure they are participating in ethical markets and enforcing sustainable practices which maintain biodiversity.

If the EU can build a global coalition with Asia, which prioritises trade and sustainability, they can underpin a bold new era in the fight for thriving, Covid-free economies.

Such cooperation would empower the European Union to encourage environmental consciousness across Asian economies—by incentivising compliance with laudable environmental goals and dis-incentivising noncompliance. There would be significant economic benefits to EU consumers as well like access to efficient and affordable edible oils from rapidly growing emerging markets. While in turn the producer would have access to the EU’s uniquely large market.

These are clearly more than enough reasons to compel the EU to act. Let’s hope they start soon.

Continue Reading

Green Planet

Making Women Visible in Plastic Waste Management: Examples from Indonesia

Published

on

Plastic Waste: Long History, Massive Consumption

Plastic was invented by John Wesley Hyatt in 1869 and has an original sense of “pliable and easily formed.” It is known as a polymer material. However, Leo Baekeland introduced the revolutionary of plastic in 1907, with the intention of creating a material that could be used as an insulator, was versatile, heat resistant, and could be mass-produced in large quantities. The glory of plastic was exalted during World War II, when the plastic industry in the United States expanded rapidly. Since it could be used to replace natural resources that had become scarce due to the war, plastic use peaked during that time span. Since then, plastic has been touted as an “award-winning” commodity due to its plethora of uses. Unfortunately, the use of plastic distracted in the 1960s as people became more worried about environmental issues and discovered that many coastal lines in America were littered with plastic waste.

These days, plastic can be categorized as the most manufactured materials in the world and commonly used by society. From the latest data by IUCN, over 300 million tons of plastic are manufactured yearly and utilized as main materials for industry and households. About 8 million metric tons of plastic wastes end up in our coastal zones every year, posing a serious threat to our marine ecology and ocean sediments. By the end of 2040, it is estimated that the amount of plastic waste dumped along the coast will be tripled compare with today.

In most developing countries, plastic contamination has become a major problem that requires immediate concern and management. Indonesia is currently the world’s second-largest plastic polluter after China, and produces about 200,000 tons of waste every day, which is thrown into the coastal areas. Despite the fact that there are plenty studies on plastic waste, people still ignored the problem due to their lack of knowledge and awareness about how harmful the effect could become in the upcoming years. Plastics production and consumption will make greater impacts not only on human health because it contained chemicals, but also will change human behavior to environment, both men and women. In Indonesia, women take role as the main contributor to raise such awareness in segregating and sorting plastic waste. This fact is parallel with the research that has been conducted by Phelan et al (2020) in two small islands in Indonesia (Selayar and Wakatobi), which found that women are mostly identified as binners (those who manage waste disposal) while men are likely identified as litterers. It was noted that almost 60% of women are in charge of household waste management, while only 40% of men involve in this activity. Women are expressing an interest in learning more about waste management, especially to learn about the next steps or what happens to the waste after disposal. Men, on the other hand, are taking important roles in waste collection and disposal process.

Gender Sensitive Approach to Manage Plastic Waste

Women play an important role in the use and recycling of plastic, but their contribution is often overlooked by many stakeholders. Plastic waste management is viewed solely from a scientific standpoint, with little consideration given to the gender implications. For example, at the micro level (households), it is customary for women to have control over the purchase of food and home-products (which has influenced them to use plastic packaging), but they may also be recycling and processing the plastic for other uses at the same time. As a result, their involvement and inclusion are critical in every attempt to enhance waste management and reduce plastic pollution. When looking at recent developments in the field, the relevance of gender-sensitive approaches to handling plastics becomes even more apparent.

Plastic waste management is not something that can be done overnight because it necessitates continuous steps and massive behavioral changes on the part of all parties concerned. Since women play such an important role in the use and recycling of plastic waste, it is critical to involve them as a key player in changing household and community disposal habits. Furthermore, as the primary caregivers in the home, women should raise awareness among family members about the dangers of plastic waste. Similar actions can be taken in society; for example, women can organize a soft-campaign and disseminate waste management information to the community (through regular social gathering conducted by women that called ‘arisan’ or regular religious meeting in community that called ‘pengajian’).Women, at the other side, cannot act alone; they need a cost-effective and simple plastic waste management system, as well as waste management training (which has been initiated by local governments and NGOs). Hence, providing a plastic collection station will help many stakeholders embrace this action. Finally, strong commitment and collaboration from relevant parties can help to improve plastic waste management.

Continue Reading

Publications

Latest

Trending