Audio Finance - 27/April/2020

Getting the finance to flow

To create demand for sustainable finance, governments should integrate climate criteria into their procurement and in how they draft policies and regulations

Sustainable finance is booming. Central bankers are raising the alarm over climate risk. Some of the world’s largest investment managers are warning the companies in which they invest that they will begin applying pressure on those who pay too little regard to environmental, social and governance (ESG) issues. Yet investments in renewables continue to lag, fossil fuel emissions continue to rise and most companies and their shareholders continue to prioritise quarterly profits over long-term sustainability.

Investment in wind, solar and nuclear needs to more than double — from around $620 billion in 2018 — over the period to 2030 if the world is to meet the goals of the Paris Agreement, believes the International Energy Agency. Similarly, the International Renewable Energy Agency estimates that $22.5 trillion needs to be invested in renewables by 2050.

Power generation is not the only field requiring investment. The Transition Pathway Initiative, which brings together pension funds managing $18 trillion, reported in February 2020 that fewer than one in five of the largest listed industrial companies are on a pathway to hold global warming to below 2°C.
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