Climate Action and ESG Investment Revolution
Javier F. Manzanares
Representative Partner
Businesses and governments around the world are finally taking climate risk seriously and environmental, social and governance factors (ESG) are driving an investment revolution. It is promising that some CEOs are committing to science-based targets for emissions, confident that this will support long-term corporate value creation. The business case for action now is becoming stronger, with carbon prices likely to increase, and growth opportunities for investing in adaptation as well as renewable energy and energy efficiency becoming increasingly attractive. Setting ambitious targets can foster innovation within the private sector – and innovation is critical if we are to get on track to achieve the goals of the Paris Agreement. Building the necessary transparency, materiality, reporting and accountability structures for integrating ESG issues into the investment process offers the possibility of delivering superior returns for shareholders and stakeholders, and helping business respond to the challenges posed by climate change to business strategies and asset valuation.
The EU is taking a leading position in this area, and US regulatory requirements for climate-related disclosures focus on providing investors with information to inform capital allocation decisions. New reporting standards such as the proposed International Sustainability Standards Board will focus on sustainability disclosure as an instrument of economic decision making rather than on establishing thresholds for sustainability performance.
At the Green Climate Fund, we are working to support the innovations – whether in policy, regulation, technology, or finance – that will help us combat climate change. With a portfolio in developing countries that will soon top $10 billion, we are using our resources to leverage private sector innovation in climate solutions.
