Evaluation of green financing from the perspective of green economy and sustainability

The concept of sustainability can be summarized as meeting today's needs while preserving the ability to meet the needs of future generations. Alternatively, it can be defined as interacting with the environment while respecting future generations' capacity to meet their needs. Sustainability is a broad concept that encompasses various subtopics, with sustainable economy being one of its key components. A sustainable economy is supported by concepts such as sustainable development and green economy. The green economy seeks to achieve its goals through tools like green finance, green budgeting, and green jobs. This study, after providing a general evaluation of sustainability and the green economy, will focus in detail on the concept of green finance, which is crucial for the success of sustainability efforts. A sustainable economy is a socio-economic concept aimed at minimizing the negative impacts caused by environmental degradation and promoting the use and encouragement of renewable resources. Humanity depends on nature for its survival. Since the Industrial Revolution, mass production has replaced manual production, leading classical economists to argue that increased production would lead to economic growth. This perspective, known as linear economy, involves a system where resources are used once and discarded. This approach overlooked the finite nature of resources, contributing not only to their depletion but also to significant environmental degradation. Ensuring the continuity of human civilization in the future requires sustainable methods, not as an option but as a necessity. As indicated in the definition of economics, resources are scarce while needs are infinite. Traditional economic systems cannot ensure the sustainability of finite resources to meet infinite needs, as the relationship between nature and humanity continues to deteriorate to humanity's disadvantage. In response to this reality, the concept of circular economy emerged as the opposite of the linear economy, emphasizing respect for nature and allowing it to regenerate through renewable resources. To achieve sustainable development, green economic policies must be adopted. The green economy aims to simultaneously ensure a sustainable environment and economy, enhancing the quality of life for all living beings while promoting an environmentally respectful economic model. One of the tools used to achieve these goals is green financial instruments. In Turkey, significant progress has been made in sustainability and green finance, though challenges remain. Investments in renewable energy and energy efficiency have exceeded 200 billion TRY as part of the commitments under the Paris Agreement. The Turkish banking sector, led by large banks, has worked to align with international standards through innovative products like green bonds and sustainable financing instruments. However, issues such as short-term funding structures, data standardization deficiencies, and limited activity among smaller banks persist. The share of sustainable financing instruments within total liabilities remains at a low 0.82%, highlighting the potential for growth in this area. Nevertheless, the increasing support from international financing sources and emerging market opportunities position the financial sector as a key player in achieving Turkey's low-carbon economy goals. The widespread use of green financial instruments will provide resources for green economy and sustainable development projects. Sustainability ensures the continuity of the production process by raising environmental awareness. Green financial instruments, which aim to achieve economic development goals by using products that are sensitive to environmental issues or cause less harm, are crucial for sustainable development. This study will also examine how green financial instruments contribute to the concept of sustainability.