Because the private sector accounts for roughly two-thirds of economic activity, it must participate in the transition to net-zero emissions and protect nature. Corporations are setting targets to align their financial portfolios and balance sheets with net-zero and broader sustainability objectives, but these financial commitments need to cause real-world changes that support decarbonization and protect nature and biodiversity.

The private sector accounts for roughly two-thirds of economic activity and private sector capital investment is necessary to create a zero-carbon, sustainable economy. The private sector has begun chasing the opportunity — companies are making capital investments in low-carbon technologies, and lenders and investors are providing cheaper financing that enables those investments.

Financial and non-financial corporations are also making commitments and setting targets to align their portfolios and balance sheets with sustainability objectives: these financial commitments need to cause real-world changes that support decarbonization and protect nature and biodiversity.

But the scale and pace of financial flows to climate- and nature-based solutions must increase substantially. By 2030, we need to increase global private climate financial flows from the current level of $685 billion per year to at least $2.61 trillion per year. In addition, we need to triple investments in nature-based solutions and increase biodiversity financial resources to at least $200 billion per year. Simultaneously, the private sector needs to phase out financing of fossil fuels and technologies that are dependent upon them.

To effectively scale up private sector investment for climate and nature, we need to shift capital investment in the material economy, decrease the cost of capital for sustainable technologies, and ensure commitments from corporates and financial institutions are resulting in these changes. We will also need to mobilize public investment to steer the market toward a net-zero, sustainable economy.

Tracking progress on global outcomes

0Right Direction, On Track
0Right Direction, Off Track
4Right Direction, Well Off Track
1Right Direction, No Target
0Wrong Direction
2Insufficient Data
Green private investment
Well Off Track
i
Investment in low-carbon energy
USD
1.5T2T2.5T3T3.5T4T4.5T201920232030
$4.56T
Green private investment
Right Direction, No Target
i
Cost of capital for renewable energy
%
4567201020220
Green private investment
Well Off Track
i
Investment in low-carbon compared to fossil fuel energy
Ratio
2468201520232030
9
Green private finance
Well Off Track
i
Private climate finance
USD/year
500B1T1.5T2T2.5T3T201120222030
$3.26T
Green private finance
Insufficient Data
i
Finance for nature-based solutions
USD
150B200B250B300B350B400B450B2019202220300
$484B
Green private finance
Well Off Track
i
Climate finance flows to developing countries
USD
60B70B80B90B100B2016202120200
$100B
Green private finance
Insufficient Data
i
Finance for biodiversity
USD
80B100B120B140B160B180B200B2015201720300
$200B

Key enablers and barriers to change

Green private finance
i
Innovation
Corporate sustainable bonds
USD
100B200B300B400B201420220
Targets and commitments
i
Innovation
Capital committed to climate solutions by financial institutions
USD
2T3T4T5T6T7T201820220
Targets and commitments
i
Leadership
GHG-emitting companies with credible transition plans
Number of companies
4.1k4.2k4.3k4.4k4.5k202120220
Targets and commitments
i
Leadership
Institutional investor assets aligned with net-zero by 2050
USD
5T10T15T20T25T202020220
Targets and commitments
i
Leadership
Corporations with validated science-based targets
Number of corporations
1k2k3k4k201520230
Targets and commitments
i
Leadership
Financial institutions with interim net-zero targets
Number of financial institutions
100200300400202120230
Targets and commitments
i
Leadership
Corporations part of the Race to Zero
Number of corporations
8k8.5k9k9.5k202220230
Targets and commitments
i
Leadership
Financial institutions part of the Finance for Biodiversity Pledge
Number of financial institutions
406080100120140160180202020240
Net-zero stewardship
i
Leadership
Assets under management engaging corporations on climate change
USD
35T40T45T50T55T60T65T201920220
Net-zero stewardship
i
Leadership
Asset managers voting favorably on sustainable resolutions
%
4747.247.447.647.848202120220

Other shift Other shifts needed to transform the system

Scale up public investment for climate and nature

To unleash the power of the public sector in achieving climate and biodiversity goals, we need strong government leadership, persistent demand for change from civil society, and coordinated monetary and fiscal policy to support large public investments.

Eliminate harmful subsidies and investments

Public and private investments continue to support activities incompatible with a sustainable future — the development of new fossil fuel reserves, overfishing, land-degrading agricultural practices and more. These financial flows must stop and be redirected to support a sustainable, decarbonized economy.

Extend economic and financial inclusion to underserved and marginalized groups

A just transition toward a decarbonized, sustainable economy will give underserved and marginalized groups new economic opportunities for high-quality employment, enable their participation in the benefits of thriving, sustainable industries and ensure the extension of financial services to all people.

Ensure that the financial system accounts for climate- and nature-related risks

Risk integration can accelerate the movement of capital toward investments and interventions that advance sustainable business transformation, emissions reductions and climate adaptation efforts. Measuring climate- and nature-related risk also helps financial institutions or regulators manage risk and a systemic level.

Price greenhouse gas emissions and other environmental harms

Setting prices on pollution and harmful activities can help tackle the unintended impacts of society’s consumption and production decisions. Governments can “price” environmental impacts by directly taxing activities that cause them, or by creating market-based mechanisms like emissions trading schemes.