Climate finance must get beyond greenwishing and greenwashing
climate change already wreaking havoc on poor and rich countries alike, unlocking this largely untapped pool of capital has become an urgent priority. Yet, as matters stand, many investors associate climate-centric investments with ‘social impact’ and reduced profitability. While sophisticated investors have the means to deploy their capital profitably toward decarbonization, the energy transition and other climate-related sectors, such investments tend to be illiquid.
They remain tightly wound up in private-equity funds, and thus inaccessible to ordinary investors and savers who are most exposed to climate-driven food, water and energy insecurity. The solution is to create climate investments that are profitable, liquid and accessible to all. CoP-28 offers an opportunity to rethink how we deliver such market solutions, and how we can harness digital innovation to scale up promising models.
To mobilize capital at scale, we must draw on the global savings of individual investors as well as institutions such as pension funds, insurers, and sovereign funds. Risk diversification can be achieved through retail-friendly, liquid, easily accessible instruments such as exchange-traded funds (ETFs). The sensible way to construct a profitable, long-term, climate-aligned, widely accessible investment strategy is to develop a diversified portfolio of assets that directly or indirectly support climate financing.
For investors with a long-term horizon, a portfolio that meets these requirements should be composed of three main asset types. The first is climate-resilient real estate and infrastructure—meaning assets in weather-proof, stable geographies that have low climate exposure. Real-estate and infrastructure valuations in such
. Read more on livemint.com
