61. Trade and Climate Change: How to Design Better Climate-Related Provisions in Preferential Trade Agreements
- Author:
- Clara Brandi, Kateryna Holzer, Jean-Frédéric Morin, Harro van Asselt, and Katherina Weber
- Publication Date:
- 01-2023
- Content Type:
- Working Paper
- Institution:
- German Institute of Development and Sustainability (IDOS)
- Abstract:
- To bring our economies on a path to climate neutrality, investments in carbon-intensive production processes have to stop. At the same time, we need to mobilise large amounts of capital for investments conducive to a just transition. Reforming the financial sector in a way that allows this redirection of capital flows to take place is crucial. As one element of a comprehensive sustainable finance strategy, taxonomies can potentially play a pivotal role in this regard. By providing common definitions for sustainable economic activities, these taxonomies aim to increase transparency on financial markets and help market participants to align their investment decisions with sustainability considerations. This policy brief presents policy recommendations concerning the implementation of sustainable finance taxonomies based on experiences with the South African Green Finance Taxonomy (GFT). It mainly builds on data collected in semi-structured expert interviews with different stakeholders of the GFT conducted in South Africa between February and April 2023 (Hilbrich et al., 2023). The implementation phase of the GFT has revealed multiple challenges, including a need for improved regulatory embedding and enhanced capacities on the part of potential users. This has led to a low uptake by market participants.
- Topic:
- Climate Change, Environment, Investment, Trade, Fossil Fuels, and Preferential Trade Agreements
- Political Geography:
- Global Focus