29 March 2024

Launch of the Green Finance Center in Papua New Guinea, Remarks by AFI Executive Director, Dr. Alfred Hannig

Ambassador Ivan Pomaleu, OBE, Chief Secretary Department of Prime Minister & National Executive Council, Elizabeth Genia, Governor of the Bank of Papua New Guinea, His Excellency, Pete Zwart, High Commissioner, Head of Mission, New Zealand, His Excellency, Guillaume Lemoine, French Ambassador to Papua New Guinea, Philippe Orliange, Executive Director, Agence Française de Développement.

Ladies and gentlemen, friends, colleagues, I am delighted to be here with you at the launch of Bank of Papua New Guinea’s Green Finance Center. Thank you for inviting the Alliance for Financial Inclusion (AFI), a network owned and led by 85-member central banks and financial regulatory institutions from developing countries, to participate in this groundbreaking event. Being with you today is a great opportunity as this week we are paying an official visit to our long-standing member, the Bank of Papua New Guinea.

We are very aware that today’s event marks a significant milestone in Papua New Guinea’s journey towards a sustainable and inclusive financial system, aligned with environmental stewardship, social responsibility, and economic prosperity. On behalf of the AFI Network, I congratulate the Bank of Papua New Guinea and everyone involved in this initiative.

The impact of climate change is very real across the Pacific Region which is, as we all know, under real threat from rising sea levels and nature-related catastrophes. Climate change is hitting society’s most vulnerable groups hardest, those with the least coping capacities. If we want a sustainable future for all, it is imperative that we embrace innovative financial solutions that are not only environmentally friendly but also inclusive and equitable.

In the past years we found that while the discourse around climate change and green finance remains visibly driven by the Global North, it’s the Global South that is most vulnerable, but, and this not known to everyone yet, also has some of the answers.

Here, it’s worth reflecting that the mandates of Central Banks in emerging and developing economies have been constantly evolving for more than 15 years. While Banks share a common primary mandate to ensure price stability, their responsibilities and objectives now reflect broader economic and social policy concerns. And, many Global South Central Banks have already – either explicitly or implicitly – added the dimension of financial inclusion to their financial stability mandate over the past decade.

The economic damage which climate change wreaks poses a direct threat to financial stability. Central Banks concerning themselves with climate change, therefore, is not mission creep, or a shift in mandate. Rather, it involves them deepening their existing financial stability mandate. It is a necessary response to critical global developments.

One of the answers to those critical developments in the space of climate change, as I mentioned earlier, is Inclusive Green Finance, in short IGF, a concept developed by the members of the AFI Network. It involves expanding vulnerable groups’ access to financial services, helping them to build resilience against the impacts of climate change. It recognizes that the transition to a green economy must be just. It must leave no one behind.

Last year, we celebrated the launch of Papua New Guinea’s groundbreaking Inclusive Green Finance Policy. The AFI network was pleased to support the policy development process, by providing technical input, policy examples from other countries, and Central Bank peer review.

Encouragingly, we now see Inclusive Green Finance taking off around the world. In Nepal and the Maldives, AFI has supported the development of Green Finance Taxonomies, classification systems that identify which economic activities are considered environmentally friendly and play a crucial role in promoting sustainable finance practices and guiding investment decisions.

In Fiji, the Reserve Bank has integrated green elements into demand-side surveys to understand people’s vulnerabilities and coping mechanisms. Surveys like this are now informing National Financial Inclusion Strategies, which in the Pacific and elsewhere, are becoming greener.

We also see interesting developments around inclusive insurance, as well as growth in green lending facilities from financial institutions, mostly on renewable energy. Green refinancing facilities are an important part of inclusive green finance, and we’re happy to see this is in Phase Two of BPNG’s Project. We’ve also noted the role of Fiji’s Disaster Containment and Rehabilitation Facility, which supports people to rebuild their livelihoods following a catastrophe.  

A focus for AF is to build capacity among financial regulators. In Samoa and Vanuatu, we have run training for central banks, helping them to map out a path to inclusive green finance policy. Similar initiatives are planned for other Pacific countries.

Here in Papua New Guinea, the establishment of a Green Finance Center marks an important step forward. AFI was pleased to provide input on setting up the Center, and we look forward to supporting and relaying the Center’s work. The insight generated here will resonate far and wide across the AFI network, encouraging and inspiring other countries to follow a similar path.

We know that inclusive green finance works. But it’s important that everyone knows. IGF needs to be part of the global discourse on climate action, and I would like to thank Governor Genia and Assistant Governor George Awap for joining AFI’s side event on IGF and financial stability at COP29 in Dubai. AFI will continue to highlight the important role of central banks and financial regulators in addressing climate change challenges. In this context, I would also like to thank our international partners, and in particular the Agence Francaise de Developpement (AFD) who is present today, for their support that assists us in carrying our important mission forward.

No one country has the capacity to solve the climate crisis. But by listening to and learning from each other, by sharing our challenges, experiences and insight, we can ensure no one is left behind in the transition to a sustainable economy. AFI’s Working Groups, In-country Implementation facility and peer learning platform will always be open to support our members in building a regulatory ecosystem for inclusive green finance.

We have already learnt a lot from Papua New Guinea’s inclusive approach to greening its financial system. We look forward to following the next stage of the journey.

Congratulations, and good luck!

Thank you.

© Alliance for Financial Inclusion 2009-2024