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Business of climate change
OpinionComment
Chris Iggo
Chris Iggo

Climate crisis: investors have a key role to play in shift to green finance

  • Global summits and national targets to reduce carbon emissions are gathering momentum with the mobilisation of capital in support
  • Investors have the techniques and data today to make the right call when it comes to having a climate-aware portfolio

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Cows roam near one of six newly installed wind turbines on a ranch in Eldorado, Texas, on April 16. Cattle rancher Bob Helmers, who for decades hosted oil wells on his ranch, recently plugged the pumps and allowed a utility company to build the wind turbines, making the shift to wind power. Photo: AFP
Chris Iggo
The US-hosted Leaders Summit on Climate marked a significant milestone on the road to the UN Climate Change Conference to be held in Glasgow, in the UK, this November. It also marked the return of the United States to the forefront of meeting the challenges of climate change.
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The Biden presidency set a new target to reduce greenhouse gases by 50-52 per cent, compared to 2005 levels, by 2030. More countries are likely to restate their national carbon emissions reduction targets ahead of the Glasgow summit, and more international collaboration will be seen to mobilise the corporate and financial sectors to contribute to the fight.

Investors have a key role to play. Capital can be allocated to encourage activities with high carbon footprints to reduce them over time and to support new technologies and businesses that offer solutions to climate change and the preservation of the biosphere.

This is already happening at pace, as shown by the rapid growth in the issuance of green bonds – bonds that raise money to finance activities that make a positive contribution to the environment – and the emergence of climate-focused investment strategies.

03:26

Two sessions: How China's environmental policies are giving a boost to green industries

Two sessions: How China's environmental policies are giving a boost to green industries

Achieving a net zero carbon economy in the decades ahead is the unifying goal for governments and the private sector. Failing to do so and allowing global warming to trigger extreme weather events, flooding and droughts will increasingly undermine the global economy and lead to humanitarian catastrophes.

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