Sustainability Sensemaking: The Future of Climate Finance

We’re pleased to share the third installment in our Sustainability Sensemaking video series: “The Future of Climate Finance”.

The annual U.N. Climate Conference (COP27) concluded on November 18 after two weeks of dialogue on how to advance global climate goals — and critically, how to fund them. Please watch the first video in this series, “The Road to COP27”, for more context on the U.N. Climate Conference and the second video, “Corporate Climate Diplomacy”, for insights into the changing dynamics of public-private cooperation at and beyond COP27.

Climate finance comprises three main priorities:

  • Funding the net-zero transition to remove greenhouse gas emissions, reduce reliance on legacy energy sources and build an energy grid more reliant on renewable sources.
  • Supporting mitigation and adaptation strategies that help address anticipated climate risks and boost resilience to global warming.
  • Paying for loss and damage related to the destructive impacts of climate change that cannot be avoided, especially in developing countries that are particularly vulnerable.

As with the U.N. Sustainable Development Goals (SDGs), the private sector is a key partner to mobilize funding for climate goals — especially to drive innovation and supply chain transformation. With the rise of Environment, Social and Governance (ESG) investing, companies are increasingly scrutinized for their non-financial performance against climate commitments, thereby aligning capital markets to sustainability factors.

To better understand the changing dynamics of climate finance, our Sustainability Taskforce spoke to the experts.

As David Wei, Managing Director at BSR, asserts — the rise in ESG investing is “because people are voting with their dollars.” There has been a big shift over the past few years, as Mindy Lubber, CEO and President at Ceres, underscores — with more and more investors globally “saying climate risk is a financial risk that matters to their bottom line.”

What Alicia García-Herrero, Chief Economist for Asia-Pacific at Natixis, would like to see is how to put green finance “in the context of a real action.” Amy Hepburn, CEO at Investor Leadership Network, reinforces the point that the greatest tool in the investor toolbox is capital allocation. In her view, the question is how to unleash resources “in a way that is expedited” and is “complimentary to the good work that the public sector’s already doing.”

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