Insuring a greener future: How green insurance drives investment in sustainable projects in developing countries?

Goshu Desalegn; Goshu Desalegn

doi:10.3934/GF.2023008

Green Finance

2023, Volume 5, Issue 2: 195-210. doi: 10.3934/GF.2023008

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Insuring a greener future: How green insurance drives investment in sustainable projects in developing countries?

Goshu Desalegn ^{1,2
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1.
Doctoral School of Economics and Regional Sciences, Hungarian University of Agriculture and Life Sciences, 2100 Godollo, Hungary
2.
Department of Accounting and Finance, Kotebe University of Education, Addis Ababa P.O. Box 16417, Ethiopia

Received: 21 March 2023 Revised: 02 June 2023 Accepted: 13 June 2023 Published: 19 June 2023
JEL Codes: Q56, Q54

Insurance companies are responding to the global challenge of climate change by introducing green insurance policies, which aim to promote sustainable projects across the globe. These policies offer financial protection and coverage for initiatives related to renewable energy, energy efficiency and other sustainable endeavors. Moreover, they incentivize investment in these projects by providing lower premiums or other financial benefits. In order to assess the impact of green insurance policies on driving investment in sustainable projects in developing countries, this study employed a systematic and bibliometric approach to thoroughly analyze the various forms, instruments, and measurements of green insurance. The study used 490 documents extracted from different databases. The search strategy involved using specific keywords to query the Web of Science, Scopus, science direct, and google scholar databases. A purposive sampling technique was implemented for data inclusion and exclusion. The study's findings indicate that the success of green insurance in developing countries faces several challenges, including inadequate infrastructure, limited awareness and education among individuals and businesses, absence of supportive regulatory frameworks and policies, insufficient demand, political instability, corruption and security concerns. Furthermore, the study finding reveals a need for more research, specifically exploring the effects of green insurance on investment in sustainable development. Hence future studies can use this finding as a benchmark for further studies. The study's novelty lies in its comprehensive analysis of green insurance policies and their impact on driving investment in sustainable projects in developing countries. Based on the findings, the study recommends that insurance companies offer incentives to investors involved in sustainable projects, such as employing premium shifting strategies that minimize premiums for non-environmentally sustainable projects and redirect those funds toward sustainable initiatives.
- Green insurance,
- sustainable projects,
- investments in sustainable projects
Citation: Goshu Desalegn. Insuring a greener future: How green insurance drives investment in sustainable projects in developing countries?[J]. Green Finance, 2023, 5(2): 195-210. doi: 10.3934/GF.2023008

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Abstract

Insurance companies are responding to the global challenge of climate change by introducing green insurance policies, which aim to promote sustainable projects across the globe. These policies offer financial protection and coverage for initiatives related to renewable energy, energy efficiency and other sustainable endeavors. Moreover, they incentivize investment in these projects by providing lower premiums or other financial benefits. In order to assess the impact of green insurance policies on driving investment in sustainable projects in developing countries, this study employed a systematic and bibliometric approach to thoroughly analyze the various forms, instruments, and measurements of green insurance. The study used 490 documents extracted from different databases. The search strategy involved using specific keywords to query the Web of Science, Scopus, science direct, and google scholar databases. A purposive sampling technique was implemented for data inclusion and exclusion. The study's findings indicate that the success of green insurance in developing countries faces several challenges, including inadequate infrastructure, limited awareness and education among individuals and businesses, absence of supportive regulatory frameworks and policies, insufficient demand, political instability, corruption and security concerns. Furthermore, the study finding reveals a need for more research, specifically exploring the effects of green insurance on investment in sustainable development. Hence future studies can use this finding as a benchmark for further studies. The study's novelty lies in its comprehensive analysis of green insurance policies and their impact on driving investment in sustainable projects in developing countries. Based on the findings, the study recommends that insurance companies offer incentives to investors involved in sustainable projects, such as employing premium shifting strategies that minimize premiums for non-environmentally sustainable projects and redirect those funds toward sustainable initiatives.

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