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.