Table Of ContentEconomics, Law, and Institutions in Asia Pacific
Farhad Taghizadeh-Hesary
Suk Hyun Editors
Green Digital
Finance and
Sustainable
Development
Goals
Economics, Law, and Institutions in Asia Pacific
SeriesEditor
MakotoYano,ResearchInstituteofEconomy,TradeandIndustry(RIETI),Tokyo,
Japan
EditorialBoard
ReikoAoki,JapanFairTradeCommission,Tokyo,Japan
YoungsubChun,DepartmentofEconomics,SeoulNationalUniversity,Seoul,
Korea(Republicof)
AvinashKDixit,DepartmentofEconomics,PrincetonUniversity,Princeton,NJ,
USA
MasahisaFujita,InstituteofEconomicResearch,KyotoUniversity,Kyoto,Japan
TakashiKamihigashi,RIEB,KobeUniversity,Kobe,Hyogo,Japan
MasahiroKawai,GraduateSchoolofPublicPolicy,UniversityofTokyo,Tokyo,
Japan
Chang-FaLo,WTO,Geneva,Switzerland
MitsuoMatsushita,NagashimaOhnoandTsunematsu,Tokyo,Tokyo,Japan
KazuoNishimura,RIEB,KobeUniversity,Kobe,Hyogo,Japan
ShiroYabushita,OrgforJapan-USStudies,WasedaUniversity,Tokyo,Japan
NaoyukiYoshino,KeioUniversity,Tokyo,Japan
FuhitoKojima,GraduateSchoolofEconomics,UniversityofTokyo,Tokyo,Japan
The Asia Pacific region is expected to steadily enhance its economic and political
presence in the world during the twenty-first century. At the same time, many
serious economic and political issues remain unresolved in the region. To further
academicenquiryandenhancereaders’understandingaboutthisvibrantregion,the
present series, Economics, Law, and Institutions in Asia Pacific, aims to present
cutting-edge research on the Asia Pacific region and its relationship with the rest
oftheworld.Forcountriesinthisregiontoachieverobusteconomicgrowth,itisof
foremost importance that they improve the quality of their markets, as history
shows that healthy economic growth cannot be achieved without high-quality
markets. High-quality markets can be established and maintained only under a
well-designed set of rules and laws, without which competition will not flourish.
Basedontheseprinciples,thisseriesplacesaspecialfocusoneconomic,business,
legal, and institutional issues geared towards the healthy development of Asia
Pacific markets. The series considers book proposals for scientific research, either
theoreticalorempirical,thatisrelatedtothethemeofimprovingmarketqualityand
haspolicyimplicationsfortheAsiaPacificregion.Thetypesofbooksthatwillbe
considered for publication include research monographs as well as relevant
proceedings.Theseriesshow-casesworkbyAsia-Pacificbasedresearchersbutalso
encouragestheworkofsocialscientistsnotlimitedtotheAsiaPacificregion.Each
proposal and final manuscript is subject to evaluation by the editorial board and
expertsinthefield.
All books and chapters in the Economics, Law and Institutions in Asia Pacific
bookseriesareindexedinScopus.
Moreinformationaboutthisseriesathttps://link.springer.com/bookseries/13451
·
Farhad Taghizadeh-Hesary Suk Hyun
Editors
Green Digital Finance
and Sustainable Development
Goals
Editors
FarhadTaghizadeh-Hesary SukHyun
SchoolofGlobalStudies GraduateSchoolofEnvironmentalFinance
TokaiUniversity YonseiUniversity
Hiratsuka,Kanagawa,Japan Wonju,Korea(Republicof)
TOKAIResearchInstituteforEnvironment
andSustainability(TRIES)
TokaiUniversity
Hiratsuka,Kanagawa,Japan
ISSN 2199-8620 ISSN 2199-8639 (electronic)
Economics,Law,andInstitutionsinAsiaPacific
ISBN 978-981-19-2661-7 ISBN 978-981-19-2662-4 (eBook)
https://doi.org/10.1007/978-981-19-2662-4
©TheEditor(s)(ifapplicable)andTheAuthor(s),underexclusivelicensetoSpringerNature
SingaporePteLtd.2022
Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whether
thewholeorpartofthematerialisconcerned,specificallytherightsoftranslation,reprinting,reuse
ofillustrations,recitation,broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,and
transmissionorinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilar
ordissimilarmethodologynowknownorhereafterdeveloped.
Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthispublication
doesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevant
protectivelawsandregulationsandthereforefreeforgeneraluse.
Thepublisher,theauthors,andtheeditorsaresafetoassumethattheadviceandinformationinthisbook
arebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernortheauthorsor
theeditorsgiveawarranty,expressedorimplied,withrespecttothematerialcontainedhereinorforany
errorsoromissionsthatmayhavebeenmade.Thepublisherremainsneutralwithregardtojurisdictional
claimsinpublishedmapsandinstitutionalaffiliations.
ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSingaporePteLtd.
The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721,
Singapore
Acknowledgments
WearegratefultotheGraduateSchoolofEnvironmentalFinanceofYonseiUniver-
sityand the Ministryof Environment of the Republic of Korea for supporting this
bookproject.WealsothankProfessorNaoyukiYoshinoandalltheparticipantsof
theworkshoptitledGreenDigitalFinanceforAchievingSustainableDevelopment
GoalshostedbyTokaiUniversityandYonseiUniversity(June30–31,2021)fortheir
commentsonthepresentedpapers.WealsothankMs.JunoKawakamiofSpringer
Nature for her help in publishing this book. We are exceedingly grateful to all the
contributorstothisbook.Withouttheirvaluablecontributions,wewouldnothave
beenabletofinalizethisbook.
v
Introduction
GreenDigital FinanceandSustainableDevelopmentGoals
TomeetobligationsundertheParisAgreementandachievethesustainabledevelop-
mentgoals(SDGs),significantinvestmentsinrenewableenergygenerationandgreen
infrastructure are necessary worldwide. An estimated US $5–7 trillion of annual
investment will be needed to deliver on UN SDGs and the Paris Agreement on
ClimateChange(KharasandMcArthur2016).However,evenbeforetheCOVID-19
pandemic,globalinvestmentinrenewablesandenergyefficiencywasnotenoughto
meettheSDGs(Sachsetal.2019;IEA2020).In2020and2021,inthewakeofthe
COVID-19 pandemic and the global economic recession, the ongoing investment
in renewable energy and energy efficiency projects fell due to a decline in global
economicgrowthandrisinginvestoruncertainty.Energyefficiencyinvestmentisnot
adequatetomeetsustainabilitygoalsandreducetheeffortrequiredfromtheenergy
supply(IEA2020).
AsrestrictionsassociatedwiththeCOVID-19pandemicareeasingandeconomies
are opening, governments are beginning to unveil their economic recovery plans.
However, there is a lack of motivation to strengthen climate change adaptations
andenvironmentalmanagementintherecoveryplans.Therecoveryoutlookseems
to follow the approach of “growth first and green it when possible” that is typical
of existing development plans. Globally, many governments seeking to stimulate
economic growth in the economic recovery have rolled back environmental regu-
lations and taxes, and increased fossil-fuel-intensive infrastructure and electricity.
ThispracticewillendangertheParisagreementonclimatechangeandseveralSDGs
(Yoshinoetal.2021).
One of the main barriers that the establishment of new infrastructure is facing
is difficulty in accessing finance. Although several new green financing solutions
suchasgreenbonds,greenbanks,greencreditguarantees,carbontaxation,carbon
trading,villagefunds,andcommunitytrustfundshavebeenestablishedindifferent
countries,thecurrentgreeninvestmentgapshowsthatthesesourcesarenotsufficient,
vii
viii Introduction
andalternativewaystofinanceprojectsarerequired(Hyunetal.2020;Taghizadeh-
HesaryandYoshino2019,2020).
Technological innovation is already offering sustainability solutions across the
financial system’s five core functions: moving value, storing value, exchanging
value,fundingvaluecreation,andmanagingvalueatrisk(UNDP2019).Increasing
transparency, accountability, decentralization of the financial system, improving
riskmanagement,increasingcompetition,loweringcostsandimprovingefficiency,
increasingspeed,increasingcross-sectoralcollaboration,andintegrationarefeatures
thatfinancialtechnology(FinTech)canprovide(UNDP2016).Artificialintelligence
(AI),distributedledgertechnologies(DLT)orblockchain,peer-to-peerlendingplat-
forms,bigdata,Internet-basedandmobile-basedpayments,Internetofthings(IoT),
matchmaking platforms including crowdlending, and tokenizing green assets are
potential means to scale-up green finance to achieve SDGs (Yoshino et al. 2020).
AccordingtoUNEP(2018),AIcouldliftglobalGDPbyUS$15–20trillionby2030.
Securingtheresilienceofsuchanachievement,notablyitsenvironmentalandsocial
sustainability,maywellbeaccomplishedbydigitalizingfinanceor“digitalfinance.”
A literature review shows a gap in utilizing digital instruments and FinTech in
greenfinance.Againstthisbackground,thisbookaimstofillthisliteraturegapby
providingseveralhigh-qualityempiricalreviewsandcasestudypapersonwaysto
promotegreendigitalfinancetomeetSDGs.
Thebookconsistsof17chaptersthatarecategorizedintothreesections.
Part1coverstheprerequisitesforfacilitatinggreendigitalfinancing,consisting
offourchapters.
Oneofthemajorchallengesfacinggreenfinanceinitiativesisparticipationfrom
theprivatesector.Thefocusofinternationalorganizationsandgovernmentsisnowto
bringprivatesectorinitiativesandinvestmentintothemainstreamofgreenfinance.
Integrationoftechnologyintotheseinitiativesisanappropriatetool.Alongwitha
hostofbenefits,technologyalsobringsrisksandchallenges.Bankingandfinancial
sectorregulatorsandsupervisorsfacethechallengeofaligningexistingregulations
withdynamicchanges.
InChap.1,VijayKumarSinghexplorestheregulatoryandlegalconsiderations
forpromotinggreendigitalfinance.Thischapteralsofocusesonthemajorconcerns
relatingto“greendigitalfinance”regulation.
Due to the nascent nature of green business models, lack of data, and other
relatedbarriers,greenfinanceisconsideredtooriskyandcostlybyfinancialservice
providers. Digitalization can reduce the cost, and by leveraging the data, stream-
line the risk assessment of green lending. In Chap. 2, Nestan Devidze explores
the current state of green digital financing. The chapter assesses the persisting
barriersandprovidespolicyrecommendationstoexpandthetransformativeimpact
ofdigitalizationinfinancingthegreendevelopmentagendasofcountries.
InChap.3,PeterJ.Morganassessestherisksassociatedwithgreendigitalfinance
andcopingpolicies.Digitalfinancialtechnologies,especiallythenewgenerationof
financialtechnology(FinTech),canpromotegreenfinanceandcreatenewrisksand
unintendedconsequences,bothfortheenvironmentandusers,whichcanlimittheir
potential to scale sustainable finance. This chapter describes risks associated with
Introduction ix
theenvironment,theuseofcryptoassets,alternativefinance,automatedinvestment
advice,andcybercrime.
InChap.4,YenerCoskunandIbrahimUnalmisinvestigatetheroleofgovernment
policiestodevelopamoreeffectivegreendigitalfinanceframeworkbasedontheParis
ClimateAgreementGoalsandSDGs.Theysuggestthatgovernmentpolicyactions
arecriticalforsuccessfulimplementationatnationalandgloballevels.Specifically,
governments can support green digital finance by implementing sound regulatory
policiesandestablishingincentivesthroughgreendatainitiatives,lowertaxes,and
technologicalinfrastructureinvestment.
Part2focusesontherecentprogressingreendigitalfinanceinAsiaandEurope,
consistingofeightchapters.
In Chap. 5, Ehsan Rasoulinezhad and Farhad Taghizadeh-Hesary employ two
qualitative methods: Interpretative Structural Modeling (ISM) and the Technology
AcceptanceModel(TAM),toevaluatetheopinionsofadvancedexpertstodetermine
thecriticalsuccessfactorsofgreendigitalfinancemarketdevelopmentinIran.The
findingsshowthatamongalldistinguishedcriticalsuccessfactors,accessibilityand
transparencyinthegreendigitalfinancemarket,theprofitabilityofgreenprojects,
andresponsibilityofdevelopersofdigitalgreenfinancetools,easingcapitalmobility,
politicalstability,andregulatoryqualityinthefieldofdigitalgreenfinancearethe
mainareasthatshouldbeaddressedbyIran’spolicymakers.
In Chap. 6, Dharish David, Miyana Yoshino, and Joseph Pablo Varun look at
the potential of natural assets convertible to carbon credits in the Association of
Southeast Asian Nations (ASEAN) region, which is vulnerable to the impacts of
climatechange.ThechapterhighlightsasignificantdemandforFinTechsolutionsin
thecarboncreditmarket,suchasfinancialinstrumentsandassociatedtechnological
innovations,todeveloplarge-scaleregionalorvoluntarycarbonmarkets.
InChap.7,SakibBinAmin,FarhadTaghizadeh-Hesary,andFarhanKhanassess
how to facilitate green digital finance in Bangladesh. The chapter argues that the
primary objective for the government of Bangladesh is to focus on preparing a
policy framework for digitization alongside the establishment of a strong regula-
tory authority for market regulation and stability. The chapter also highlights the
importance of interdisciplinary research and development programs for acquiring
new FinTech ideas for facilitating green digital financing in Bangladesh for green
transitionandmeetingSDGs.
In Chap. 8, James F. Paradise looks at the role of green digital finance in
achievingSDGsinChina’sBeltandRoadInitiative(BRI).Thischapterhighlights
theimportanceofmovingbeyondexhortatorystatementstowardbindingresolutions,
increasing the rigorousness of environmental standards, embedding sustainability
considerationsinBRIprojects,andhelpingtoincreasetheimplementationcapacity
indevelopingcountries.
InChap.9,AsifRumanetal.highlightthecriticalroleofFinTechmicroenterprises
in the financial innovations and sustainability interlinkage using a qualitative case
study from Finland. The qualitative assessment of three Finnish microenterprises
showsthatFinTechcandevelopuniquetechnology-basedsustainable(green)offer-
ings to microenterprises. These offerings include the possibilities for other firms
x Introduction
to engage with sustainability-conscious consumers, invest in sustainable firms at
reasonablereturnrates,andgetridofpaperreceiptsfortransactionsusingcreditor
debitcards.
In Chap. 10, Sarvar Gurbanov and Farahim Suleymanli provide an analytical
assessment of progress in green digital finance in the Republic of Georgia. The
studyillustratestowhatextentgreenfinanceanditsdigitizationlevelareavailable
in the Republic of Georgia. The major policy implication is that the country faces
unintended consequences despite a robust regulatory attempt to mobilize private
financial sources. This case study is relevant for many developing countries for
drawinglessonsonbetterpolicymaking.
InChap.11,VijetaSingh,NanditaMishra,andFarhadTaghizadeh-Hesaryhigh-
lighttheinvestmentrequirementsinIndiatoachieveSDGsandoutlinethestepstaken
byIndiatowardthedigitalizationofgreenfinance.Thischapteralsounderlinesthe
challengesfacedbyIndiainthefieldofgreendigitalfinance.Itdrawssomeinitial
recommendationsforpolicymakersinharnessinggreendigitalfinanceforachieving
SDGs.
InChap.12,SukHyunanalyzesthecurrentstatusandchallengesofgreendigital
finance in the Republic of Korea. The Korean New Deal policy has an essential
meaninginthatitsuggestsadirectionfortransitiontoadigitaleconomyandagreen
economy.However,therearelimitationsasitispresentedinvariousseparateprojects
undertheDigitalNewDealandtheGreenNewDeal.Thischapterhighlightsthatthe
nexusbetweentheDigitalNewDealandtheGreenNewDealneedstobeexplored
forsuccessfulimplementationoftheKoreanNewDealPolicy.
Part 3 covers the role of FinTech and financial innovations in scaling up green
digitalfinance,anditconsistsoffivechapters.
In Chap. 13, Tim Schloesser and Karsten Schulz show how distributed ledger
technology(DLT)canbeusedeffectivelyforinnovativeclimatefinance.Theyfirst
introduce the technology and discuss its sustainability and different possible DLT
governancestructures.Theyprovideanoverviewofsustainability-relatedinitiatives
andnetworkslinkedtoDLT.ThischapterreviewsvariousDLTapplicationsindecen-
tralizedfinance(DeFi),assetmanagement,measurement,reporting,andverification
(MRV),tokenization,andotherrelevantfields.Thechapterconcludeswithanoutlook
ontheroleofDLTinclimatefinanceandpresentsrecommendationsforovercoming
someoftheremainingrisksandobstacles.
InChap.14,MohamedA.B.M.T.Thakeretal.studythepotentialroleofFinTech
anddigitalcurrencyforIslamicgreenfinancingbyprovidinganintegratedmodel.
Thereisanabsenceofanintegratedmodelintheliterature,whichcouldenhancethe
roleofFinTechanddigitalcurrencyinIslamicgreenfinancing.Thechapterfillsthis
literaturegapinsettinganewresearchdirectionforintegratedFinTechanddigital
currencymodelsthatcanfurtherenhanceandoptimizetheefficiencyofIslamicgreen
financing.
In Chap. 15, Keun Jung Lee and Hong Jeong provide a framework for digital-
izinggreenbonds.Theyproposeablockchain-enabledgreenbondissuingplatform
thatcanprovideanadaptiveandefficientsystemthatlowersintermediarycostsby
reducinginformationasymmetryandfacilitatingcompliance,scalability,disclosure,
