Editing Environmental finance (section)

== Strategies ==
[[File:Logo Renewable Energy by Melanie Maecker-Tursun V1 4c.jpg|thumb|Renewable Energy Schematic]]
Societal shifts from fossil fuels to renewable energy caused by an increased awareness of climate change has made government bodies and firms re-evaluate investment strategies to avoid irreparable [[Environmental degradation|ecological damage]].<ref name=":7">{{cite journal |last1=Ding |first1=Ashley |last2=Daugaard |first2=Dan |last3=Linnenluecke |first3=Martina K. |title=The future trajectory for environmental finance: planetary boundaries and environmental, social and governance analysis |journal=Accounting & Finance |date=March 2020 |volume=60 |issue=1 |pages=3–14 |doi=10.1111/acfi.12599 |s2cid=213576271 |doi-access=free }}</ref> Shifts away from fossil fuels also increase demand into alternate energy sources which requires revised investment strategies.<ref name=":7" />

The initial stage to mitigate climate change through financial tools involves ecological and [[economic forecasting]] to model future impacts of current investment methodologies on the environment.<ref>{{cite journal |last1=White |first1=Mark A. |title=Environmental Finance: Value and Risk in an Age of Ecology |journal=Business Strategy and the Environment |date=1996 |volume=5 |issue=3 |pages=198–206 |doi=10.1002/(SICI)1099-0836(199609)5:3<198::AID-BSE66>3.0.CO;2-4 }}</ref> This allows for an approximate estimation of future environments; however, the impacts of continued harmful business trends need to be observed under a non-linear perspective.<ref name=":2" />

[[Cap-and-trade]] mechanisms limit the total amount of emissions a particular region or country can emit. Firms are issued with tradeable permits which they can buy or sell. This acts as a financial incentive to reduce emissions and as a disincentive to exceed emission caps.<ref name=":0" />

In 2005, the [[European Union Emission Trading Scheme]] was established and is now the largest emission trading scheme globally.<ref name=":0" />
[[File:Foto aére de solnovas y torre junio 2010.jpg|alt=Common renewable energy source used in developing nations|thumb|Solar Panel Infrastructure]]
In 2013, the Québec Cap-and-trade scheme was established and is currently the primary mitigation strategy for the area.<ref name=":8">{{Cite web |title=The cap-and-trade system in Québec |url=https://www.centreforpublicimpact.org/case-study/cap-and-trade-system |access-date=2023-07-12 |website=Centre For Public Impact (CPI)|date=13 June 2016 }}</ref>

[[Direct foreign investment]] into developing nations provide more efficient and sustainable energy sources.<ref name=":0" />

In 2006, the [[Clean Development Mechanism]] was formed under the Kyoto Protocol, providing [[solar power]] and new technologies to developing nations. Countries who invest into developing nations can receive emission reduction credits as a reward.<ref>{{Cite web |title=The Clean Development Mechanism |url=https://unfccc.int/process-and-meetings/the-kyoto-protocol/mechanisms-under-the-kyoto-protocol/the-clean-development-mechanism |access-date=2023-07-12 |website=unfccc.int}}</ref>  

Removal of atmospheric carbon dioxide has been proposed as a solution to mitigate climate change, by increasing tree densities to absorb carbon dioxide. Other methods involve new technologies which are still in research development stages.<ref>Cho, R. (2019). ''“Can Removing Carbon from the Atmosphere Save Us from Climate Catastrophe?” State of the Planet.'' https://blogs.ei.columbia.edu/2018/11/27/carbon-dioxide-removal-climate-change/</ref>

Research in environmental finance has sought how to strategically invest in clean technologies. When paired with international legislation, such as the case of the Montreal Protocol on Substances that Deplete the Ozone Layer, environmentally based investments have stimulated emerging industries and reduced the consequences of climate change. The international collaboration would ultimately lead to the changes that repaired the hole in the ozone layer.<ref>{{Cite journal|last1=Linnenluecke|first1=Martina K.|last2=Smith|first2=Tom|last3=McKnight|first3=Brent|date=2016-12-01|title=Environmental finance: A research agenda for interdisciplinary finance research|url=https://www.sciencedirect.com/science/article/pii/S0264999316301948|journal=Economic Modelling|language=en|volume=59|pages=124–130|doi=10.1016/j.econmod.2016.07.010|issn=0264-9993}}</ref>

=== Climate finance ===
{{Excerpt|Climate_finance}}