Priority Directions For Improving Green Financing Mechanisms In Commercial Banks

Abstract

This study aims to identify priority directions for improving green financing mechanisms in commercial banks, with particular emphasis on financial instruments, environmental and credit risk management, funding diversification, digitalization, institutional capacity, and performance measurement. The study employs a conceptual analytical approach to examine the challenges and strategic measures associated with integrating environmental sustainability into banking operations, particularly in Uzbekistan. The analysis identifies six key priorities: diversifying green financial products, strengthening environmental and credit risk assessment, expanding access to long-term funding, implementing digital technologies, enhancing institutional capacity, and establishing measurable financial and environmental performance indicators. The proposed framework incorporates indicators such as the share and growth of green loans, non-performing green loan ratios, returns on green financing, energy and water savings, estimated greenhouse gas emissions avoided, and the proportion of projects with verified environmental data. The study also proposes a phased implementation strategy involving portfolio assessment, pilot green financing programs, and the gradual expansion of digital monitoring and environmental reporting. The findings suggest that effective green financing requires coordinated improvements in financial innovation, risk management, funding structures, technological systems, and institutional governance. Integrating transparent environmental criteria into conventional banking decisions can strengthen financial sustainability, improve accountability, and support Uzbekistan's transition toward a greener economy.