How can finance become greener?

"No credible pathway to 1.5C [is] in place", the United Nations Environment agency concluded last month, lamenting the lack of action and claiming current pledges to reduce global carbon emissions are not ambitious enough. The global financial sector has the potential to play a leading role in the fight against climate change. Firstly by reducing the loans and investments it provides to carbon intensive industries, secondly by using its assets (totalling over $460tn) to fund the green transition. While industries with large carbon footprints, like energy, automotive and aviation, are feeling pressure to become more sustainable, the finance sector still only has a voluntary obligation to report emissions targets. As a result, fewer than half of finance firms currently disclose the actions they are taking to make their portfolios greener. "The role of large-scale investors is quite crucial in us reaching the 1.5C target," says green infrastructure specialist Tara Shirvani, PhD. "We have to reach – by 2050 – net zero, and that will need an investment of around $4tn annually up until then. We're barely scratching the surface." How can global finance be incentivised to wield its power to accelerate the green transition? What can governments, stakeholders and consumers do to push the finance industry into action? Watch the video for more information and share your views below. Reported by: Manas Pratap Singh, Pieter Cranenbroek Video editing: Antonio Mérida Ordás Sources The Guardian: https://lnkd.in/eKySnsd7. Reuters: https://lnkd.in/eFJFk_9j. #GreenerTogether #Cop27

What will the world look like in 2100 ? After reading an insightful article by LinkedIn news, it got me thinking how the Wealth Management industry can play our role in a more sustainable future. As many would agree, we have all lived through unprecedented times but if we fail to take any action now the next generation will have no time at all. The shift to a greener future does not mean an end to capitalism, but an active role of fund managers in ensuring funding is directed towards companies with the right intentions. The legend, David Attenborough once said “it's surely our responsibility to do everything within our power to create a planet that provides a home not just for us, but for all life on Earth." the ecosystem we live on is the backbone of society and while the world has never been more divided, this is perhaps the one shared topic that has the potential to unify us. I am confident the next generation of innovator’s in this space are passionate about greener solutions, but in a world which is driven by profits it’s hard to see how they will be given the sufficient amount of funding needed. Do company’s truly care about ESG or is it purely a marketing ploy to green wash their activities. #GreenerTogether  #Cop27 #sustainability #environment #esginvesting

#Realitycheck: Climate finance flows are nowhere near estimated needs of USD 5 trillion annually. Climate investment should count in the trillions, whereas fossil fuel investments, which exceed USD 850 billion annually, should dramatically decrease this decade. Climate finance commitments also need to translate into action in the real economy, requiring all public and private actors to align their investments with Paris goals and net zero pathways. The big elephant in the room, will be the need to fill the investment gap for adaptation finance in developing countries. Currently set at USD$155-330bn the public sector continues to provide almost all adaptation financing. That’s a drop in the ocean considering the total need of $1 trillion per year in the developing world to achieve net-zero by 2050. A priority in raising financing is the reform of multilateral development banks, above all the World Bank. A key criticism remains that such organisations are simply too conservative and currently holding back on lending in a bid to maintain their AAA credit rating. Much more could be done to not only encourage private investment but also funnel more grants and ‘concessional’ loans- i.e. loans offered on generous terms below the market rate – to middle-income countries to assist the transition away from coal. Implementing such changes needs radical rethinking on the role of these institutions in the global climate finance world. Check out more of my thoughts here on LinkedIn News today #linkedin #development #investment #paris

A few days into COP27 and reflecting on finance day, it has a very different focus from COP26 where it was all about finance for the transition to net zero. The focus is very much on addressing the physical risks of climate change: finance for loss and damage as well as adaptation solutions. The barriers are higher for private investors to get involved so mobilising private capital and derisking through blended public-private finance are key topics. This is very encouraging and addresses the climate justice and adaptation gaps raised in our recent COP27 mind the gap article. These topics were not sufficiently addressed at COP26. However, there is a big omission in my view - no one talks about the fact that at COP26 countries were asked to updated their pledges (NDCs) by COP27 so they add up to 1.5C and not 2.4C. There has been very little progress on that as highlighted by the Climate Action Tracker report published today. We are still on track for 2.4C and only 24 NDCs were updated post COP26 with marginally increased ambition. And what about progress on actually implementing all the pledges? This credibility gap remains large, too and the CAT report below suggests that the expected growth in gas may outpace climate action…a sobering read and something we need to talk about at COP27 to address the ambition and credibility gap and enable capital allocation for net zero. #cop27

Finance is taking centre stage this COP and not before time. It’s a discussion about cost and accountability but ultimately about what jobs, growth, security and societies will look like in the future. That's why progress on the COP27 finance agenda is crucial. Yesterday’s report from Sir Nicholas Stern and the Independent High-Level Expert Group on Climate Finance gave a stark assessment on what’s needed - $1 trillion annually by 2030 for emerging and developing countries other than China. That is huge. Today I took part in a panel discussion with Fatimetou Abdel Malick, Ambassador Seyni Nafo, Marisa Drew, Gillian Lofts and Julie Teigland at the UNFCCC Pavilion on how to scale up financing to the Global South, especially Africa, at COP27. Together we wanted to come up with some practical next steps for governments and financial services. Here are my main takeaways: 1. We need to anchor finance locally and focus on outcomes, not just outputs - this links to long term risk reduction. 2. It's estimated that Africa’s infrastructure needs are in the range of $130-170bn a year. We must make sure that all current and future infrastructure investment in Africa is climate proof. 3. Demand for high quality carbon credits is very high, and a critical resource for mobilising investment at scale. 4. Underfinancing of adaptation is a risk: Mitigation could be way more costly. To focus plans, we need to look at climate change impacts through the lens of a much wider range of risk including security, food or growth, for example.   It was a real privilege to host a panel with such a diversity of thinking and ideas. There is so much more work to do but I for one came away with an overall feeling of hope for the future. Here's the link where you can watch back a recording session of the session online: https://lnkd.in/eDyRCv8C Do let me know what you think in the comments.