Investment is critical to achieving the United Nations Sustainable Development Goals for 2030—investment in people, economies, infrastructure, and technology. Sustainable investment refers to all areas related to sustainable, low-carbon development with the goal of improving risk-adjusted long-term investment returns. Sustainable investment grew out of a decades-old investment strategy and movement known as socially responsible investment (SRI), which gradually came to incorporate consideration of environmental protection, social responsibility, and corporate governance, also referred to as “ESG”. Sustainable investments seek not only competitive financial returns, but also aim to reduce ESG risks and provide solutions to social and environmental problems.
Europe has maintained its position as the world’s largest sustainable investment market for nearly a decade and the total investment in sustainable assets have grown at an average annual rate of 8% to US$ 14 trillion in 2018. At US$ 12 trillion in 2018, the sustainable investment market in the United States is approaching the size of the European market. The fastest-growing market is Japan, whose sustainable investment volume was only US$ 5.9 billion in 2012, rising to US$ 2.18 trillion by the end of 2018 and thereby becoming the world’s third-largest sustainable investment market, accounting for more than 7% of the total investment. In 2019, the Global Investor Study shows that 80% of Chinese investors will consider sustainable factors in their investments, and nearly 70% of Chinese investors believe that sustainable investment can make an important contribution to the world’s sustainable development.
Over the 6-year period, the market for “Green Debt Instruments” grew from US$ 2 billion annually in 2012 to US$ 250 billion per year in 2018, providing a wide range of financial products (green/ sustainable/social bonds, green loans). The total value of private sustainability-oriented bonds and funds is now estimated between US$ 1.2 trillion and US$ 1.3 trillion. Investor focus on sustainability issues is driving the growth of sustainable investment. Globally, more and more financial institutions and investors are embracing and practicing sustainable investment, which will become the mainstream form of investment in the future and will grow rapidly in the next decade.
What is the new package? On March 4, the Standing Committee of the Political Bureau of the Communist Party of China (CPC) decided to speed up the construction of major infrastructure projects. As the new stimulus package, it focuses on technologies that promote sustainable infrastructure.
The Cities Climate Finance Leadership Alliance (the Alliance) is a multi-level and multi-stakeholder coalition aimed at closing the investment gap for urban subnational climate projects and infrastructure. The Alliance provides a platform to convene and exchange knowledge among all relevant actors dedicated to urban development, climate action, and/or financing. Check out their resources at: https://www.citiesclimatefinance.org/
The C40 Cities Finance Facility (CFF) facilitates access to finance for climate change mitigation and resilience projects in urban areas by providing technical assistance to develop cities’ sustainability
priorities into bankable investment proposals. The CFF aims to deliver project preparation and capacity development, and to widely share knowledge and establish partnerships between cities and financiers. Check out their resources at: https://www.c40cff.org/
The City Climate Finance Gap Fund (Gap Fund) helps cities in developing and emerging countries realize their climate ambitions, turning low-carbon, climate-resilient ideas into strategies and finance-ready projects. The Gap Fund supports cities and local governments in preparing and prioritizing climate-smart plans and investments with the goal of attracting more financing and support for implementation. Check out their resources at: https://www.citygapfund.org/
SuRe® – the Standard for Sustainable and Resilient Infrastructure is a third-party-verified, global voluntary standard, developed through a multi-stakeholder approach incorporating inputs from developed and emerging nations to drive the integration of sustainability and resilience aspects into infrastructure development. Check out their resources at: https://sure-standard.org/
