Leveraging investment for infrastructure is a critical pillar of the low-carbon transition. Around USD 6.3 trillion of annual investment is needed until 2030 in energy, transport, water and telecommunications infrastructure, to sustain growth and increase well-being.
In recent years, trillions of dollars in capital have flowed into investments that are assessed using environmental, social and governance (ESG) criteria.
ESG criteria have helped raise awareness and strengthen corporate and investor commitments, but more work is urgently needed to ensure that ESG ratings are fit for purpose. Today’s ESG markets contain a huge variety – and at times divergence – in methodologies, performance metrics and product structures. There is still much to be done to make ESG investing fairer, more transparent and more efficient.
The COVID-19 pandemic highlights the urgent need to consider resilience in finance – not just in the financial system itself, but the role of capital and investors in making economic and social systems more dynamic and able to withstand external shocks. These include risks associated with climate change, which, beyond the pandemic, are perhaps the most pressing challenges to financial stability and resilience.