The role that financial institutions can play in acting as potential investors in these companies through the discrimination of credit merit is essential to influence the market through economic actors.
The objective of green finance is to mobilize as much green capital as possible by sharing environmental and social objectives with the public. The performance of increasing green investments, through the mobilization of private capital, not only increases the competitiveness of the company, but also multiplies green public investments by creating win-win solutions as they seek economic growth with reduced environmental impact and increased social equity. For this to be possible and viable, it is also necessary to include a combination of economic policy instruments to implement a new regulation that enables and supports the transformation of the financial sector.
Example of Financial instruments for financial institutions
Crowfunding BA, VC, Always among the variety of hybrid instruments, another very used financial structure is the Royalty Debt, where the traditional debt is combined with payments based on a percentage of the income and then Demand dividend,
The owners of mezzanine debt are indirectly protected by means of auxiliary contractual clauses (covenants) that prevent the increase in the level of risk, for example, by prohibiting the subscription of new short-term credit, the sale of assets or profitability. in the financial structure of the company. In this case, the Reserve Bank of India has regulated a specific insurance contract, a Credit Default Swap (CDS)
Ethical banking that the first eco-ethical bank created in Europe, the GLS Gemeinschaftsbank, experienced in Germany.