Our thinking

Financing a better future

17 July, 2020

Everyone agrees we need to tackle climate change. But major change requires major investment. This is where the International Platform for Climate Finance comes in.

The initiative is being driven by Aviva Investors. ItsChief Responsible Investment Officer, Steve Waygood used his appearance at last month’s Responsible Business Week summit to ask people to join this coalition. But what is it exactly, and what will it do?

Today, for the first time, we have broad consensus on tackling climate change. There is no lack of scientific evidence, political will, or even available capital. What is missing is a way to co-ordinate the raising and deployment of this capital to allow the world to reach net-zero by 2050. Achieving this will require $1 trillion of new investment capital every year. So how do we direct that capital towards achieving the change that we need to see?

The International Platform for Climate Finance will be a mechanism that brings together (for the first time!) governors of central banks, finance ministers and CEOs of financial organisations to ensure that money is flowing in the right direction to hit net-zero. The financial institutions will bring the money, and the political bodies will bring the investment projects that will deliver the right kind of green development. Meeting regularly, these two groups will then be able to work together to ensure that markets are set up to support the aims of the Paris Agreement, with investors alerting governments to misaligned incentives that can then be corrected through tax, subsidies and regulation.

Waygood describes the initiative as a ‘public good investment bank’ for all UN states. Details of exactly how the Platform will work will be decided between now and the slated launch date at COP26, rescheduled for November 2021.

By Ben Wood