The IFR Green Financing Roundtable, sponsored by the European Investment Bank, Luxembourg Stock Exchange, and White & Case, welcomed a panel of experts in green finance to discuss recent developments in Green bonds and other instruments, and to outline the next steps that need to be taken as issuance becomes more widespread.
This is the fourth year in a row in which IFR has held this event and its longevity reflects the increasing importance of the subject to the capital markets.
According to the US National Oceanic and Atmospheric Administration, April 2018 was the 400th consecutive month with above-average temperatures. It was the third-warmest April on record globally, the second-warmest in Australia and the warmest in Europe.
As the data reveals, the impact of global warming is undeniable − from the melting of the ice caps to the bleaching of coral reefs. A rise in temperatures above the 2°C target agreed in Paris will have huge consequences on the natural world, the economy and on human safety and well-being.
The European Commission reckons the European Union alone needs to spend an additional €180bn per year in energy efficiency and renewable energy to reach its 2030 climate targets. In Asia, the figure quoted to build the requisite climate-resilient, sustainable infrastructure is US$1.7trn per year and the total globally rises to US$6trn. Those numbers cannot be financed by the public sector.
The question that needs to be answered is how to create the kind of environment that supports the flow of some US$100trn of assets under management into the type of green investments that will address climate change − and address it in a socially responsible way. Of course, the caveat is that building sustainability into the system is not done at the expense of economic growth.
Green bonds provide one of the answers to that question and they could well end up doing the heavy lifting when it comes to mobilising private finance. At the launch of the Green Bond Pledge in March, the UN’s former climate change chief, Christiana Figueres, called for the annual issuance of Green bonds to reach US$1trn by 2020 to deliver a “sustainable future for everyone”.
Despite the increasingly supportive noises coming from politicians, regulators, pressure groups and investor organisations, more needs to be done if global private investment is going to be efficiently channelled into assets supporting the aims of the Paris Agreement.
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