Advancing adaptation through climate information services

Description

For the world’s governments to limit the rise of global temperatures to less than 2°C, stem the climate damage that is already starting to occur, shift to a low-carbon economy, and seize the economic opportunities of clean energy and other climate-related activities, trillions of dollars of investment are required over the coming decades. Current investment levels fall well short of what is needed. Without private sector investment, this climate investment gap will not be closed and these objectives will not be achieved. Investors are concerned with the risks presented by climate change to regional and global economies and to individual assets. At the same time, investors are interested in the large potential economic opportunities that the transition to a low-carbon economy presents. Investors have a fiduciary responsibility that requires them to seek optimal risk-adjusted returns on their investments. At present, in the absence of strong and stable policy frameworks, many low-carbon investment opportunities do not currently pass this test.

Private investment will only flow at the scale and pace necessary if it is supported by clear, credible, and long-term policy frameworks that shift the risk-reward balance in favor of less carbon-intensive investment. Prudent investors around the world have therefore joined to endorse this statement. We welcome a dialogue with governments and international institutions on the policies and finance tools needed to catalyze private investment in the low-carbon economy. In particular, investors are calling for:

• Domestic policy frameworks to catalyze renewable energy, energy efficiency, and other low-carbon infrastructure, so as to provide investors with the certainty needed to invest with confidence in receiving long-term risk-adjusted returns.
• International agreement on climate financial architecture, delivery of climate funding, reducing deforestation, robust measurement, reporting, and verification, and other areas necessary to set the global rules of the road, bolster investor confidence, and allow financing to flow.
• International finance tools that help mitigate the high levels of risk private investors face in making climate-related investments in developing countries, enabling dramatic increases in private investment.

Reference information