Growing consensus to prioritize eco-awareness in all aspects of our lives, including finance, has been observed in recent years. In fact, sustainability featured strongly on the agenda of the Asian Financial Forum (AFF) in January this year, with “green finance” as a popular thread that ran through the Forum’s discussions.
As a sourcing agent, buyer, or supplier, you may be wondering what benefits green finance can offer you. In this article, we will explore the advantages of green finance and how it can help you achieve your business goals.
Why Consider Green Finance?
Advantage #1: Improved Access to Capital
Green finance can help you access capital that is specifically earmarked for sustainable projects. This means that companies that prioritize sustainability can often get preferential treatment when it comes to accessing funds for expansion or other capital-intensive projects. In addition, green finance can help you reduce the cost of capital by lowering your risk profile in the eyes of investors.
Advantage #2: Enhanced Brand Image
By embracing green finance, you can showcase your commitment to the environment and generate goodwill among your customers and stakeholders. This can lead to increased brand loyalty and stronger customer relationships. Additionally, a strong sustainability record can help you differentiate your business in a crowded marketplace and attract new customers who prioritize sustainability.
Advantage #3: Regulatory Compliance
As governments around the world continue to prioritize eco-friendliness, many are implementing regulations to encourage companies to reduce their environmental footprint. By adopting green finance practices, you can stay ahead of the curve on regulatory compliance and avoid potential fines or other penalties. This can also help you demonstrate your commitment to sustainability to stakeholders and customers.
Advantage #4: Reduced Operational Costs
Adopting green finance practices can also help you reduce your operational costs by cutting down on energy, water, and other resource usage. This can not only help you save money but also improve your environmental record, leading to increased goodwill and customer satisfaction.
Advantage #5: Better Risk Management
Finally, green finance can help you improve your risk management by identifying potential environmental risks and developing strategies to mitigate them. This can help you avoid costly environmental incidents and improve your reputation with stakeholders and customers.
Green Finance Products to Choose From
So, what common green finance products are there in the market? Are SMEs eligible/able to play the game? The answer is a definite “Yes” with below in place:
Green Loans
These loans are for supporting eco initiatives within your business. It’s a great way to tap into green financing as their use of proceeds (UoP) has become increasingly diversified. You can utilise the green loans in sourcing eco-friendly raw materials, for example, and the main condition is to disclose and report the usage of proceeds to lenders at least once a year.
Read More: Be Eco-Smart! Top Green Textile Products This Season
Green Bonds
Green bonds are often issued by governments, companies, or organizations to fund environmentally-friendly projects such as renewable energy, energy efficiency and so on. Depending on your local authorities’ criteria, SMEs can submit applications to invest in these bonds and receive a financial return (earnings).
Read More: New Energy: The Eco-Friendly Solution For Sustainable Sourcing
Green finance, when accompanied with quality and in-demand products, will give your company exceptional advantages. Start sourcing outstanding products with hktdc.com Sourcing, our trusted e-Marketplace by clicking below banner:
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