Transitioning to a greener economy is a worldwide agenda. Several countries have adopted policies, regulations and guidelines to solidify or accelerate their position on sustainability and align their approach with the Paris Agreement. As a party to the agreement, Georgia has made commendable strides towards greening its economy, for example by adopting energy efficiency laws, enabling net-metering, and developing its energy market. The road is long, however, and many challenges still lay ahead.
Georgia’s commitment to sustainability is strong and ever-present, as underscored by an event held on 16 February 2023 in Tbilisi entitled “Green Finance for Sustainable Economy”. This collaborative initiative hosted by the European Bank for Reconstruction and Development (EBRD), the National Bank of Georgia (NBG) and the International Chamber of Commerce (ICC) showcased how far Georgia has come in mainstreaming sustainable finance and the challenges is it working on right now. High-profile speakers and representatives from local enterprises, commercial banks, and business associations attended the conference.
The NBG recently approved the Sustainable Finance Taxonomy (SFT) and the Regulation on Loan Classification and Reporting in accordance with the SFT. As of January 2023, this regulation also requires commercial banks to submit monthly reports on green loans. As part of the green taxonomy, loans in specific categories, such as solar PV projects or electric vehicles, can automatically be classified as green; however, for other categories, there are technical requirements and specifications which must first be checked to determine whether a loan qualifies as green according to the approved taxonomy.
As the TBC Bank’s ESG Coordinator, Maka Bochorishvili, pointed out, banks face internal as well as external challenges. The starting point is developing internal criteria and choosing the right products for green investments. While the bank expressed its readiness to move towards the goal of having a 1 billion green loan portfolio, Ms. Bochorishvili noted that the public is largely unaware of the benefits of “green” projects. Raising awareness and educating its clients, both in the capital and in the regions, is high on TBC Bank’s agenda. The head of Environmental Management at ProCredit Bank, Aleksandre Jashiashvili, cited two “green” areas of investment in Georgia today: energy-efficient technologies and solar power plants. The former category stems from the country’s long history of energy efficiency financing, while the latter emerged in the light of increasing electricity prices for businesses. At the same time, ProCredit bank is actively working on popularising electric vehicles in Georgia: to this end, it has already expanded the chain of free charging stations for the public and is developing special products that will help its clients import and purchase EVs.
Despite the steep challenges, Georgia has strong allies. Along with financing facilities and programmes, such as GEFF, which operates in 28 countries, including Georgia, through its partner financial institutions (including TBC and ProCredit Bank), the EBRD offers many tools and services for financial institutions and businesses that can aid in broadening knowledge about green financing, creating a strong network and a support system for SMEs, and facilitating trade and relationships between businesses. The EBRD presented some of the principles, tools and knowledge it is employing to achieve its ambitious goal of making at least 50% of its investments green by 2025.
The event concluded with a panel discussion with various business representatives, which revealed that major entities in Georgia are striving towards greening their operations. A major logistics operator has fully upgraded its network to reduce its carbon footprint; developers of both large and medium-scale residential buildings are using energy-efficient building materials, heating/cooling and lighting systems; and supermarkets are taking care to ensure that their new branches are aligned with energy efficiency standards.
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