More than half of asset owners (56%) believe that without greater investment in transition-finance assets, the world will not be able to meet the Paris Agreement climate-change goals.
That greater investment will require action at lots of different levels. “We need the policy positions, and we need regulations that underpin those,” says Brunel Pension Partnership’s Faith Ward. “There is an opening for blended finance and more collaboration between development banks and investors. Everybody needs to come together, recognising that there will be different solutions in different markets as well.”
Within asset owners, asset managers and consultants, a culture shift that is already under way will need to accelerate. “I think most people with ‘sustainability’ in their title spend as much, if not more, time on culture change as they do on technical work,” says OPTrust’s Alison Loat. “The technical work is not the hardest part. It has plenty of complexity, but organisational change demands that we collaborate with every single part of the organisation, changing many processes and workflows. A lot of this relies on building trust and always ensuring good communication. It all takes a lot of time and is incredibly rewarding work.”
Unlike some of the major transitions of the past, time is of the essence in the fight against climate change. There was no deadline on the industrial revolution, or the rise of electricity, or the information age. The pace of these shifts could largely be set by market forces, and in each case there were periods where progress slowed to a crawl before suddenly racing forward.
And asset owners are in a unique position. They have the capital and influence to help the world transform before change becomes irreversibly harmful. By allocating finance to transition, they can help mitigate climate change while profitably participating in the world’s adaptation to net zero.
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Exploring the rise of transition finance