Most people now realize the cost of inaction to deal with climate change is far higher than the cost of action. The challenge is mustering the political will to make smart policy choices.
A new report by the Global Commission on the Economy and Climate, of which I am a member, shows climate action delivers local development benefits as well as emissions reductions. In fact, smart policy choices can deliver economic, health and climate benefits for developed and developing countries alike.
Three trends in the global financial market are converging to make sukuk, the Islamic financial instrument most similar to a conventional bond, a potentially viable form of finance for green investments: (1) banks are reluctant to finance infrastructure due to stricter capital requirements; (2) an increasing number of investors are interested in ‘environmentally sustainable investing’ (in other words, investing to promote activities seen as positive for the environment); and (3) the market for sukuk is growing significantly. While these three trends are distinct and not obviously related, taken together, they create a market opportunity for sukuk to be used as a tool to finance environmentally sustainable infrastructure projects.
The need for significant infrastructure spending is obvious in both developed and developing countries. From crumbling transportation infrastructure in the United States to inadequate power generation capacity in India, the evidence is clear that improving infrastructure is a global priority. At the same time, popular concern about climate change and the detrimental impact of increasing greenhouse gas emissions has also made improving infrastructure in an environmentally sustainable manner a priority.
Executives from Alstom, the Swedish pension fund AP4, Deutsche Bank, and the French pension fund ERAFP joined finance ministers for an informal climate ministerial discussion about carbon pricing during this year's World Bank Group/IMF Annual Meetings. After the meeting, Rachel Kyte, the World Bank Group's vice president & special envoy for climate change, described the conversation and some of the takeaways.
This past week, we saw our future in a world of more extreme weather as Super Typhoon Haiyan tore apart homes and cities and thousands of lives across the Philippines.
Scientists have been warning for years that a warming planet will bring increasingly extreme and devastating weather. Scientific certainty has brought climate change over the planning horizon, and the impact is now unfurling before our eyes. This level of damage, with millions of people affected, will become more frequent unless we do something about it – fast.
Negotiators from around the world are here in Warsaw for the UN climate conference to work on drivers that can spur that action on a global scale.
It is not overly complicated. We need to get the prices right, get finance flowing, and work where it matters most. But, each of these will take political will to right-size our collective ambition – for ourselves and for the people of the Philippines and the Pacific Islands and the low-lying coasts of Africa and the Caribbean who are directly in harm’s way.