Sia Partners' 2023 International Mobile Banking…
Global investments in Green Finance would have to be multiplied by 15.4 to meet 2030 goals.
Global climate investments have grown by an average of 10.3% each year since 2013 and reached $615 billion in 2019. Renewable energies attract the majority of investments (58%) thanks to their maturity. However, their share in the global energy capacity still remains small (4%).
Worldwide, the private sector (56% of the investments) focuses on projects with the most mature technologies and established business models. The public sector (44% of the investments) invests mostly in emerging technologies.
France mobilizes 8.3% of global climate-focused investments, with a large part dedicated to energy efficiency. These investments are expected to increase from 2021 onwards following the adoption of the recovery plan which will mobilize €100 bn including €38.1 bn dedicated to green activities, targeting the most polluting sectors as a priority.
These investments are still largely insufficient to achieve global goals and mitigate global warming; the dynamics of green finance must be strengthened. Europe shows the way, as a leader in green finance with 45% of the Green Bond issues and a regulatory environment supporting the development of green investments. In France, financial actors are mobilized with 704 labeled funds.
Banks set up exclusion policies, quantification methods, specialized offers (offers for corporate and investment banks as well as retail banks) and investments in green assets in order to attract new capital. Fintechs are also a lever for the development of these offers by bringing novelty and by challenging historical players.
Green Bonds are the most standardized products in green finance which explains their success. They reached $257.7 billion worldwide in 2019, up by 54% compared to 2018. A Green Bond issuance requires a strong and regular commitment from the issuer throughout the project. This requirement, in terms of transparency and reporting, is the main obstacle in the expansion of Corporate Green Bonds. With $10.5 billion, Engie issued the largest Green Bonds in the world, confirming France's prominent position in green finance.
With only 17% of Green Bonds certified and more and more sectors involved, the risk of greenwashing should not be taken lightly.
To guide investors and support the development of green finance, Europe launched the European Taxonomy based on the recommendations of the Task Force on climate-related Financial Disclosures (TCFD). This aims to create a common analysis framework integrating all energy sectors and climate transition to harmonize the evaluation criteria taken into account by green products and labels.
Greening the global economy requires achieving nearly $100,000 billion in green investments by 2030 corresponding to a 15.4-fold increase in annual global investments ($ 615 bn). With $ 53 bn mobilized to date by the public sector, all private actors must use green products, identify projects using the framework given by the European Taxonomy, while ensuring their resilience to increasing climate risks.