Scale up private investment for climate and nature

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.

Transforming Climate Finance

This webinar recording features a high-level discussion with finance leaders on how to unleash far more finance to tackle the climate crisis and accelerate sustainable development.

Tracking progress on global outcomes

Key enablers and barriers to change

Other shift Other shifts needed to transform the system

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.

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.

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.

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.

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.