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Special Edition Magazine, Fall 2019: Sustainability

English

Financing the Low-Carbon Transition

Despite some governments and private-sector actors taking steps to address the threat of climate change, the world is falling further behind in meeting internationally agreed targets for reducing emissions and limiting global warming. To get back on course, more must be done to leverage the power of financial services.

NEW YORK – If pragmatic minds prevail, governments and the private sector, working together, can usher in a low-carbon economy and help the world adapt to the climate-related transformations already underway. In fact, several developments over the past year have shed light on the role that investors and financial services can play in managing or mitigating the global systemic risks posed by climate change.

For example, in June, the United Kingdom became the first country in the world to set a national target of net-zero greenhouse-gas emissions by 2050, while also unveiling a comprehensive green-finance strategy to boost investment in sustainable infrastructure and renewable energy. The same month, Chile’s government issued a $1.4 billion green bond, joining a bull market in which sovereign and corporate green-bond issuances could top $250 billion by the end of the year.

But climate action has also run into new political obstacles this year. At the G20 summit in Osaka, representatives from the host country, Japan, appeared to downplay the importance of emissions reductions prior to and during negotiations, amid fierce resistance from the United States, Brazil, Turkey, and Saudi Arabia. While the summit’s final communiqué did acknowledge the “irreversibility” of the 2015 Paris climate accord, it also offered space for the US to reiterate “its decision to withdraw from the Paris Agreement because it disadvantages American workers and taxpayers.”

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