ESG | GREEN FINANCE
Trillions needed to plug gap So , how large is this sustainable finance gap ? Some world leaders may want to look away now …
Estimates vary and continue to rise the more action is delayed . The latest Report of the Independent Expert Group to the G20 states that emerging markets and developing economies ( excluding China ) will need to spend US $ 3 trillion per year by 2030 .
Globally , the Sharm-el-Sheikh Implementation Plan , agreed at COP27 in 2022 highlighted that the world will need between US $ 4 trillion and US $ 6 trillion per year to transition to a low-carbon economy .
“ The estimates consistently refer to trillions required per year to be deployed to financing the SDGs and climate action ,” says Sivakumaran .
“ While it is easy to throw one ’ s hands up at such a large number and conclude that this is not possible , our report also notes that there is indeed sufficient capital to meet these gaps . The question therefore is not how large is the gap but rather how fast can we meet the gap in time , given that the physics of the carbon budget is unforgiving , and we are already at 1.1 degrees Celsius of global temperature rise .”
Part of the problem when it comes to SDGs is the sheer scale of the journey required , which can make achieving those goals seem like an impossible dream . However , as Sivakumaran points out , there are positives to cling to – and the fact that sufficient capital is available is surely central to meeting those goals , no matter how far away they may seem .
“ The opportunities are right there in front of us ,” says Sivakumaran . “ The question is one of how fast can economies transform to meet the needs of our future , and how fast can financing transform to meet the new economy ’ s needs .
“ This requires political will , of course , but also coordination and coherence by ministries and regulators , in executing the transition in a rapid and orderly manner .”
104 December 2023