BusinessDay

How to unlock, mobilise private capital for climate change action

As the world faces extreme weather conditions that underpin climate change, the need to mobilise private capital for action rather than leaving it for the government alone has been emphasised.

According to experts, there is a need to mobilise the support and resources of the different stakeholders, as that is the only way to minimise impact and achieve potentials of the green economy.

Nigel Green, chief executive officer, deVere said increasing deadly weather extremes around the world prove that mobilising private capital is “essential” and “urgent” in order to combat climate change.

Green, who is the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations, revealed the past seven years have been the hottest on record, according to new data from the EU’s satellite system.

The Copernicus Climate Change Service said 2021 was the fifth-warmest year, with record-breaking heat in some regions.

To raise this capital, the deVere CEO suggests a three-pronged approach. First, “We need cooperation between financial advisors, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks and auditors, amongst others, to help unlock and mobilise the trillions of dollars of private finance that is urgently required. Without this, the level of funds required will simply not be there.”

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Second, “A global regulatory framework for environmental, social and governance (ESG) investing is now urgently required to further boost confidence and protections for investors.”

And third, “All climate risk and vulnerability data must be made immediately available by governments and their agencies as it is concluded in order to further strengthen the case for ESG-orientated investments.”

Paddy Ezeala, environmentalist and public affairs commentator said it is very important to mobilize private sector funds for climate action.

According to him, governments alone cannot support climate mitigation and adaptation responses, as resilience building requires all hands to be on deck.

“Private sector involvement presupposes that climate consciousness has permeated the ranks of industrial captains. This is a major highway to green economy, Ezeala said.

But commenting further, Nigel Green said, from the deadly heatwave that struck the west coast of the US in the summer to the severe winter storms that shut down the grid in Texas in February; from Kenya’s two consecutive failed rain seasons, to the central region of China being hit with more rains in three days than in a normal year, there’s no getting away from the fact that the situation is getting increasingly serious all over the world.

“How many more major, real-world incidents do we need to underscore what the experts have been saying for years? This is happening quicker than many had anticipated.”

He continues: “With a growing frequency of incidents and higher levels of severity, it’s clear that governments alone cannot combat the worst effects of human-triggered climate change.

“Governments are best-positioned to develop, implement and manage policy, incentives, standards, metrics and regulations, and yes, they must provide top-level funding.”

“But due to the tens of trillions likely to be needed for disaster prevention and mitigation, there will remain a major funding gap if we rely solely on the public sector.

“This is especially true as governments are still battling with the unprecedented financial fallout of the Covid pandemic, for which no country was prepared and that upended economies globally.”

Nigel Green calls for private sector mobilisation of funds, following his organisation’s pledge to position $2billion of assets under advisement into environmental, social and governance (ESG) investments within five years.

The Group is also one of 18 founding signatories of the UN-backed Net Zero initiative, the international alliance of powerhouse global finance companies that will help accelerate the transition to a net zero financial system.

Its membership means it is committed to “aligning all relevant products and services to achieve net zero greenhouse gasses by 2050 and to set meaningful interim targets for 2025.”

Nigel Green concludes: “Climate change remains the most serious risk multiplier to our planet, to our communities, and to our way of life.”

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