Financing a Sustainable Future - Is the Financial Community Listening
light in otherwise dark and troubled financial markets over the
past decade. But new financing structures are required to promote
clean energy investment and to stimulate sustainable economic
GLOBE-Net, October 13, 2011 - The global
financial system is still recovering from the near collapse of the
international banking system and major economic upheavals that have
brought several countries to the brink of insolvency.
Investor confidence in many sectors has been profoundly shaken,
contributing to forced closures and takeovers of many industry
giants in the automotive and manufacturing sectors.
The unprecedented occupation of Wall Street that began in
September is becoming a nation-wide expression of frustration over
perceived failings of established financial institutions.
Is the financial community listening?
“The financial services community has many serious lessons to
learn and internalize in the wake of the shocking destruction of
value resulting from the recent financial market crisis”,
states Paul Clements-Hunt, Head of the United Nations Environment
Programme Finance Initiative (UNEP FI).
Even though the aftershocks of that crisis are still being felt,
he notes, there is another finance and capital market story to tell
- essentially a positive narrative that must be told
collectively in the run up to, during, and following the UN’s
That narrative is that the global banking, insurance, and
investment communities are becoming more active in the fields of
sustainable finance and responsible investment.
Indeed, at the upcoming UNEP FI Global Roundtable taking place
in Washington D.C., October 19-20, 2011, the case can be made
the decades-long discussion over sustainable finance is paying off,
that sustainability is finally becoming part of mainstream business
and policy-making. The tipping point, in other words, has been
crossed, and there is no turning back.
Still, it is an unfolding story as the relationships
sustainable development, investment financing, capital markets, and
the green economy are undergoing profound, and some would argue,
For example, risk reduction has become a major preoccupation of
the financial, banking, and insurance sectors, particularly in the
wake of recent devastating climate and weather related disasters
and overall uncertainty in capital markets.
Financial institutions, venture capital firms, and governments
recognize the bottom line benefits of risk avoidance and
responsible investment strategies are
increasingly focused on job-creating green projects and
The insurance industry, in particular, in anticipation of
corporate needs for access to capital and investment financing, is
providing new products and services that help address risk
reduction and emerging sustainability issues.
But these measures often come at a higher cost and this is
affecting the pace of clean technology deployment.
Investments in renewable energy technologies have been the one
bright light in an otherwise dark and financially troubled global
marketplace over the past decade.
Bolstered in part by recovery spending programs of major
industrialized economies, there has been a marked increase in clean
energy investments, with China the clear leader in terms of the
scope of technology development and deployment.
However, the widespread global deployment of renewable energy
will require the development of creative financing mechanisms to
fund green projects and clean technology ventures and doing away
with systemic impediments to technology innovation and
Some leaders say new financing structures, such as
public-private partnerships, are required to unlock clean energy
investment and to stimulate economic growth.
Clean technologies are finding capital, but the pace of market
forces that foster widespread adoption is producing change at a
rate far below what is required for the material job growth and
carbon remediation that industrial and developing nations are
Discussions now underway at the UN are looking at new measures
to narrow the gap between the risks that the private sector can
afford in deploying new technologies and the rates of deployment
needed to meet the global growth targets.