Signatory countries of the Paris Climate Change Agreement have committed to decreasing carbon emissions and reducing global warming by at least two degrees Celcius for fighting against climate change. Moreover, the European Union has declared to European Green Deal, and it has been taken one step further from the Paris Climate Change Agreement. European Green Deal aims to transform Europe into the first carbon-neutral continent in the world in 2050. EU member countries have prioritized achieving the reduced emission level and then reaching carbon-neutral societies in the next phase. European Green Deal has not only been related to EU member countries but also has affected Turkey as a prominent commercial partner and candidate member country. Ministry of Trade – Republic of Turkiye has released the Green Deal Action Plan to comply with the changes that will emerge with European Green Deal and related transformation policies. This study has been aimed to evaluate the third section of the Green Deal Action plan, which involves green finance.
TopDefinition Of Green Finance
Green finance has not been clearly defined. Although climate finance, green finance, and sustainable finance have been used interchangeably mainly, there have been scope differences between the concepts. The concept of climate finance has only been related to the effects of climate change. Due to the narrow meaning of climate finance, green finance has been dealt with in a broader scope. This concept has been related to prevalent environmental issues. In more broadly terms, green finance is a generic term for financial instruments, methods, and policies associated with the developing projects, policies, and technologies for sustainable development targets. On the other hand, sustainable finance includes environmental, social, economic, and governance factors (Berrou, Dessertine & Migliorelli, 2019, p. 13; UNEP, 2016, p. 10).
There have been at least three fundamental reasons for the lack of definitional clarities of green finance. Firstly, identifying the green sector and activities has been taken some difficulties. Although defining renewable energy or energy productivity investment has not been taken as a clarifying difficulty; clarifying green finance has not been an easy task. Some approaches have included electric and hybrid cars in the definition of green finance. But some others have embraced a more rigid framework and have been interested in only renewable and sustainable instruments. Consequently, this kind of definitional complication has been visibly in the clarifies made by diverse international institutions. Secondly, defining specific criteria for green finance instruments has been so difficult. And thirdly, the definitional ambiguity of green finance has undermined the trust and hindered the development of this emerging market (Berrou, Ciampioli & Marini, 2019, pp. 32 – 33).