The Green Investment State: Public Finance Leads as First Mover in Greening the Financial Sector

The state is an underappreciated actor in closing the green funding gap via green bond issuance. By drawing on an original dataset processed using content and regression analysis, this paper finds that national and international public issuers both take climate risk seriously in their communication and, critically, ‘put their money where their mouth is’, by allocating funds towards green initiatives. Indeed, public development banks act as enablers and frontrunners of green finance and are actively seeking synergies with the private financial sector to address the funding gap. The findings confirm the robustness of the argument that a ‘green entrepreneurial state’ is a reliable first mover not just in innovation and production, but also in our generation’s challenge to prevent a climate catastrophe.