Financing the Transition

The process of changing financial systems to align investment flows with the sustainability target has been aggravated by the transition to low-carbon and inclusive development. The chapter is presented as the green capital is a revolutionary mechanism that alters the economic structures, priority of sectors of development. According to the theory of sustainable finance and recent case studies, the analysis suggests the way, in which green bonds, blended finance and other financial instruments attract investments to renewable energy, climate resilient infrastructure, and socially inclusive projects. The analysis shows that the key determinants to consider in order to combat risks such as fragmentation and greenwashing are the critical governance, policy coherence, and institutional capacity. The chapter presents an argument that funding the transition is virtually a coordination issue and a systemic issue that requires long-term orientation of the financial innovation and Sustainable Development Goals.

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