« 2 ℃ Finance» and Green Bonds Challenges

Since the industrial revolution, the planet has experienced warming, and this has been scientifically proven by natural systems and particularly high anthropogenic greenhouse gas emissions between 2000 and 2010, which will lead to a warming of 3.7 ℃ to 4.8 ℃ by the end of the century. Therefore, extreme heat waves and risks related to water resource availability are expected. Rising sea levels, more intense storms, droughts, and floods threaten the world’s poorest and most vulnerable population. The financial sector, a key sector, must certainly intervene by acting on the carbon footprint, which passes the level of capital allocation towards investments, favoring renewable energies and low co2 emissions. This is in line with the “2 ℃ finance”, which is compatible with the limited warming scenario. Green financial intervention involves the development of green bonds. The objective of our paper is to present the new concept of 2 ℃ finance, its role in ecological transition, and attempt to unveil the problems for the financial system to assess the carbon footprint. To this end, we present a new indicator: the indicator of co2 emissions avoided. Indeed, this indicator can be calculated to give the levels of co2 not emitted and the gain brought by the investments financed by the green bonds. For further implications, we suggest that future research focus on and empirically test the impact on 2 ℃ finance and the financial sector.