Mobilizing private capital

November 12, 2021

As part of the main objectives of this COP26, the private capital is being asked to do more. Finance will provide a key vehicle for the delivery of ambitious climate actions, with investors playing a critical role in tackling this issue. Committing to Net Zero is a first step.

Last week, we heard about USD 130 Trillion of assets represented by 450 firms assembled under the Glasgow Financial Alliance for Net Zero (GFANZ). This group unites financial services from the:
• Net zero Asset Owner Alliance (USD 10 TR)
• Net zero Asset Management Alliance (USD 57 TR)
• Net zero Banking Alliance (USD 66 TR)

In addition, they are now joined by the Net zero insurance alliance, the Net zero financial service providers Alliance and the Net zero consultants initiative.

Committed asset managers and owners must align their lending and investment activities with the Paris Agreement goals. This will require companies invested or financed to have temperature trajectories declining towards net-zero targets by 2050. Industrial processes and production systems will need to sober up on carbon emissions and new technologies developed to ensure the global economy conforms with this objective.

For this reason, the pledge from this group of financial institutions includes the development and spread of climate solutions. Identifying companies that will contribute to transform key industries and support the global transition to a climate-resilient economy will create attractive opportunities. We look for companies that provide products or services enabling substantial reductions in, or the removal of, greenhouse gas emissions. From smart or zero-carbon energy systems, low carbon mobility, the green hydrogen economy, and many other, multiple solutions will be needed.

The investment community must also work together with governments to ensure a sustainable future and mobilize public and private capital notably regarding the development of green infrastructure.

We need to put these USD 130 trillion at work and the sooner the better.

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