Investors call on policymakers to derisk finance support for Paris Agreement and SDGs

The Net-Zero Asset Owner Alliance consists of more than 70 institutional investors that collectively manage more than $10trn of assets. It has today (29 September) issued a new call on policymakers to help scale blended finance structures for climate solutions.

Blended finance is a finance structure that leverages public and philanthropic capital to improve the risk profiles of investment opportunities in order to catalyse private sector funding. The investors believed that these structures would help mobilise climate-related capital toward emerging markets and developing economies (EMDEs).

While the signatories note that capital for clean technology and sustainability is readily available and growing, they express concern that financial mechanisms aren’t being blended to ensure that capital is funnelled into EMDEs.

Signatories to the call included UN Special Envoy for Climate Action and Finance Mark Carney and UN High-Level Climate Action Champion, Nigel Topping, as well as the Sustainable Markets Initiative and the Investor Leadership Network.

Alliance chair Günther Thallinger, said: “Using blended finance structures is simply a win-win for the public and private sectors. While the private sector benefits from an improved risk profile, the public sector and the philanthropic community achieves a multiplier effect.

“At the core, this is not new, but it has been tested multiple times. We have before us an opportunity to incubate and scale investment to create substantial global impact. Let’s finally use this opportunity.”

the Alliance specifically calls on policymakers to scale capital that “create fiduciary investment assets” by closing the investment risk gap between EMDE needs and investor obligations. Investors are also calling for governance and operating models of businesses and banks to be restructured to better align with the SDGs

Other calls for action include widening the pool of investible projects based on geographical locations and making guarantees that would make climate solutions and clean technology investments more attractive to private investors.

Public finance concerns

The call to action comes as new polling data of UK citizens found that many are concerned about how the climate crisis will impact their ability to save money and achieve or maintain financial security.

New data from The Climate Coalition has found more than six million people in the UK think that climate change and the destruction of nature will make it harder to build up savings or have financial security.

Indeed, the polling also found that 17% of UK citizens are worried their children will have difficulty insuring their homes or face rising insurance costs and that 13% feel their children will have difficulty selling their homes because of flooding or other extreme weather.

The Climate Coalition’s head of campaigns and politics Bronwen Smith-Thomas said: “When we think about climate change, people often picture the physical impact of flooding and fires – but our new polling has shown that the financial impact is a big worry for millions of people in the UK.

“This research paints a picture of hundreds of thousands of people worrying about skyrocketing insurance costs as extreme weather and flooding get worse or scared that they won’t be able to sell their home when they want to move on. Now we need to see urgent action from Government and corporations to make positive changes to create a safer, greener world that current and future generations deserve.”