Risk Assessment in Finance: A Blueprint for Jordan’s Green Financial Sector
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Jordan is taking a significant step towards developing its green financial sector by launching a comprehensive strategy to combat climate change. The Central Bank of Jordan (CBJ) has partnered with the World Bank to create a blueprint for integrating environmental considerations into financial decision-making.
The CBJ’s Green Finance Strategy 2023-2028
The CBJ’s Green Finance Strategy is a pioneering effort in the Middle East and North Africa (MENA) region, focusing on seven key areas:
- Capacity-building
- Climate risk assessment
- Supervisory framework
- Regulations
- Green finance mobilization
- Inclusive green finance
- Sustainable Islamic finance
The strategy includes detailed action plans with targets and timelines for achieving its ambitious goals.
Technical Assistance from the World Bank
The World Bank has provided technical assistance in developing the strategy, offering expertise in climate risk management and green finance. The bank will continue to support implementation, with the climate risk assessment underway and a comprehensive green finance capacity-building program expected to be delivered soon.
Jordan’s Financial Sector: A Key Driver of Climate Finance
Jordan’s financial sector is seen as a key driver in mobilizing climate finance, with simple calculations suggesting that making just 20% of its banking sector’s credit portfolio green could cover the private sector share of its $10 billion climate investment needs by 2030.
Lessons Learned from the Project
Experts highlight several lessons from the project, including:
- Embracing emerging areas of green finance
- Addressing data gaps
- Leading by example through regulator and supervisory actions
The strategy also underscores the importance of comprehensive and coordinated national policies to create demand for green financing.
Launch Event and International Support
The launch event of the CBJ’s Green Finance Strategy brought together public, private, and financial sector representatives, as well as international partners and peers from Morocco and Egypt. The project has received support from several donors, including:
- United Kingdom
- Canada
- Kingdom of Netherlands
- Germany
- Norway
Inspiring a Regional Model
As Jordan takes the lead in implementing its green finance strategy, it is expected to inspire other countries in the region to follow suit. The project serves as a model for integrating environmental considerations into financial decision-making, paving the way for a more resilient and greener economy.