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Given the importance of low carbon industries to economic growth and employment, as well as wider climate change concerns, leadership in driving development forward needs to also come from other stakeholders than the national government.
In order to drive low carbon innovation and lower global emissions, stakeholders across both public and private sectors need to get involved and rely less on national governments leadership. The private sector has been stepping up as the new leader, with new internal strategies for reducing emissions throughout operations and value chains, with renewable energy purchasing and selling, and investing in innovative products and solution. Regional and city leaders have also shown great leadership in the past few months, reaffirming their commitment to the Paris Agreement and implementing new policies to facilitate investment in low carbon solutions. Finally the large institutional investors such as commercial banks show the way to large scale investment in low carbon technologies.
Identifying the right low carbon projects to invest in, and divest portfolios from fossil fuels is still a key challenge amongst the finance community. Low carbon innovation is still regarded as a high risk and low profit business and is hence still widely avoided. The Sustainable Investment Forum’s expert speakers proved, through their case studies, that such investment projects can be de-risked and highly profitable, and show how to understand risk and maximise low carbon investment returns.
Trust is key to move the sustainable investment industry forward. Defining green and establishing global standards is crucial to enabling the development of impactful financial instruments and gain investors’ trust. In gaining investors’ trust in sustainable financial instruments, investment and project transparency and monitoring are crucial tools, for stakeholders to understand better where the invested money is actually going.
Global policy makers are key to defining the regulations that will help standardise the climate finance sector, in partnership with existing associations and institutions.
Decarbonising and greening traditional finance requires significant innovation. Incentivising low carbon investment is crucial to unlock private sector investment.
New financial instruments – climate funds, asset classes, bonds, initiatives etc. – need to be developed to green investors’ portfolios. Green bonds are a leading example of a new instrument that performs highly; after 10 years in the market they reached $41.8 billion worth of investment worldwide in 2015.
Financial technology (Fintech) is transforming the global financial system, creating a new, more efficient, accessible and less vulnerable financial system is rising. The industry is currently challenged as it thinks about solutions for sustainable investment based only on the current financial system rather than the one that will emerge shortly with the rise of Fintech. New technologies, such as blockchain, are changing the world of banking but it is necessary to understand the applications, the consequences and the necessary regulations.
It is crucial that policy makers, banks, the private sector and Fintech companies work together to find sustainable investment solutions that will be adapted to the future financial system.
The energy sector has benefited from large investment and financing, and thanks to the Paris Agreement and the SDGs, transitioning to a low carbon energy system is now part of national priorities. Countries are therefore creating and adapting policies to facilitate the transition to a low carbon economy. It is crucial that this progress will not be slowed down, and that the industry is enabled to achieve the emission targets and stay below 1.5C.
Renewable energy and low carbon transport are far more advanced than sustainableagriculture and forestry, and already benefit from large-scale investments. It is important not to avoid the topic of resilience and adaptation of the agriculture and forestry sectors which are both huge GHG emitters. Business models are not strong enough to make sustainable agriculture of forestry and land-use profitable or attractive for low carbon investors. For this, it is important for the industry to address this issue and discuss possible solutions – maybe through the development of specific financial instruments and initiatives or else. A broader understanding and awareness are needed for the agriculture and forestry sectors not to stay behind.
For more information and the full agenda, please download the conference brochure by clicking below: