COP31 to Address Verifiability of Green Finance and Climate Action
COP31, specifically on Finance and Trade Day in Antalya, is set to focus on scaling up climate finance, with a significant emphasis on ensuring the verifiability of 'green' labels in financial instruments. Research highlights that while signals like ESG ratings and green bonds are useful, a 'green label' is a claim, not proof, and its strength varies due to voluntary principles and lack of mandatory independent review. To address this, three simple checks are proposed: looking for numbers over adjectives to identify real action, following the money to track where funds are allocated and their reported results, and comparing multiple sources to identify discrepancies in ratings. These checks aim to help investors and companies distinguish genuine green action from mere labeling. The discussion at COP31 will explore ways to make these checks easier and more effective.
