Greening Financial Reform

Trillions of dollars are needed annually to prevent climate change and natural-resource constraints from stalling the global economy and threatening the livelihoods of billions of people. In order to compel investors to provide the needed financing, financial-market regulatory reform should be linked to the green-growth imperative.

SEOUL – Trillions of dollars in “green finance” – that is, low-carbon, resource-efficient investment – are needed annually to prevent climate change and natural constraints from stalling the global economy and threatening the livelihoods of billions of people. But investors remain resolutely brown and dirty, unwilling to bet on a sustainable future. Now, given an increased focus on regulatory reform, policymakers must seize the opportunity to chart a new course.

Given the low cost of capital and the need to stimulate the global economy, now is the ideal time to invest in the infrastructure needed to support sustainable growth. But prolonged economic recession in developed countries, together with the rise of cheap shale gas, has undermined investment in clean technologies.

While investment in renewable energy is higher in emerging economies, it remains inadequate to support a sustainable future. Even in China, where green initiatives have gained significant attention in recent years, investment in renewables – high by international standards – is dwarfed by investment in coal-generated energy.

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