However, the industry in Uganda and other developing countries has to deal with a public that has yet to fully appreciate green financing. Now, the Uganda Institute of Banking and Financial Services (UIBFS) is leading the sensitisation drive that also involves identifying and rewarding projects that are compliant with basic climate-smart or green production practices.
Banking industry sets out to reward green financing: How to participate
The financial industry has launched new efforts to encourage small and micro enterprises to embrace “climate-smart” operations, amidst growing restrictions on financing. The global and local financial industries are increasingly under pressure to target their finances towards projects that contribute to the mitigation of the effects of climate change or help protect the environment.
This drive has seen the staff of the institute, as well as the Bank of Uganda, the Uganda Microfinance Regulatory Authority, the Deposit Protection Fund, the Uganda Bankers Association, the Uganda Retirement Benefits Authority, the Insurance Regulatory Authority, and the Uganda Insurers Association, save money to award best projects.
Goretti Masadde, the Institute’s Chief Executive Officer said throughout 2023, players in the financial services sector have run a saving challenge where the staff of different organizations have collected money which will go towards boosting the most befitting women or youth-led green smart initiatives.
“Climate Change has become a harsh reality of our time. It is causing loss of lives, infrastructure, sources of livelihood, and more. These are initiatives or businesses that have a good environmental outcome like reducing carbon emissions, reducing or preventing the impact of climate change on life, livelihoods, and infrastructure as well as conserving biodiversity,” Masadde says.
The activity targets individuals or groups of women or youth business proprietors, investors, founders, or any stakeholders involved in innovative green projects.
However, the projects are required to demonstrate a focus on climate mitigation, climate adaptation, and biodiversity conservation and demonstrate good savings and financial discipline. The potential nominee will give a description of the project’s impact on the environment and why it deserves the award, in the form of descriptive pictures or video clips. Winning projects will be awarded 5 million shillings each.
How can you participate in green finance?
"Green finance is gaining momentum in developing countries, with India's green bond market expected to reach $50 billion by 2025 and China having the world's largest green bank," says Gaurav Shrivastav.
"Innovative examples include the Green Climate Fund, which has invested over $10 billion in renewable energy, energy efficiency, and sustainable agriculture projects, and the African Development Bank's New Deal on Energy for Africa, which aims to provide universal access to electricity and sustainable energy for all Africans by 2030," he adds.
Here are five ways to participate in green financing
Green tips are some simple and practical ways to make your investments more green and responsible. For example, you can do research on the Environmental, Social, and Governance (ESG) ratings, disclosures, and impacts of potential investments.
Additionally, diversifying your portfolio and balancing your risk and return expectations according to your goals and preferences is important.
Moreover, engaging with your investees and using your voting rights and voice to influence their policies and practices is beneficial. Furthermore, monitoring your portfolio and reviewing your performance and impact on a regular basis is recommended.
Lastly, seeking professional advice from experts or advisors who specialize in green finance is wise.
Green bonds are fixed-income securities that raise funds for environmentally friendly projects, such as renewable energy, clean transportation, or pollution prevention. They offer a similar return and risk profile as conventional bonds but with the added benefit of supporting green causes.
You can buy green bonds directly from issuers, such as governments, corporations, or banks, or through funds or Exchange-traded Funds (ETFs) that specialize in green bonds.
Green stocks are shares of companies that produce or provide green products or services, such as solar panels, electric vehicles, or organic farming. They can offer higher growth potential than traditional stocks, but also higher volatility and uncertainty. You can buy green stocks individually or through funds or ETFs that focus on green sectors or themes, such as clean energy, circular economy, or social impact.
Green funds are mutual funds or ETFs that invest in a diversified portfolio of green assets, such as bonds, stocks, or commodities. They can help you access a wide range of green opportunities and reduce your exposure to specific risks or markets. However, you should be aware of the fees, performance, and criteria of each fund, as there is no universal definition or standard of what constitutes green finance.
Green certificates are certificates that certify that a certain amount of electricity was generated from renewable sources, such as wind, solar, or hydro. They can help you offset your carbon footprint and support green energy producers. You can buy green certificates from various providers, such as utilities, brokers, or platforms, or through some funds or ETFs that include them in their portfolio.
Green crowdfunding is a way of raising money from a large number of people online for a specific green project, business, or initiative. It can help you support innovative and impactful ideas that may not have access to traditional financing sources. You can participate in green crowdfunding through various platforms, such as Kickstarter, Indiegogo, or GoFundMe, or through some funds or ETFs that invest in crowdfunded projects.
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