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Private funding ‘essential’ to fight climate change

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Increasing deadly weather extremes around the world, with the past seven years the hottest on record, prove that mobilising private capital is “essential” and “urgent” in order to combat climate change, according to the chief executive of a leading independent financial advisory and fintech.

New data from the EU’s satellite system, the Copernicus Climate Change Service, said 2021 was the fifth-warmest year, with record-breaking heat in some regions.

“With almost depressing predictability, a ton of new heat records were smashed in 2021 and we witnessed more and more shocking extreme weather events,” said deVere Group’s CEO, Nigel Green.

“From the deadly heatwave that struck the U.S. west coast in the summer to the severe winter storms that shut down the grid in Texas in February; from Kenya’s consecutive failed rain seasons, to central region of China being hit with more rain in three days than in a normal year, the situation is getting increasingly serious all over the world.

“This is happening quicker than many had anticipated.”

Green said that with a growing frequency of incidents and higher levels of severity, governments alone cannot combat the worst effects of human-triggered climate change.

“Governments are best-positioned to develop, implement and manage policy, incentives, standards, metrics and regulations. And, yes, they must also provide top-level funding.

“But due to the tens of trillions needed for disaster prevention and mitigation, there will remain a major funding gap if we rely solely on the public sector,” said the deVere chief executive.

“Governments are still battling with the unprecedented financial fallout of the Covid pandemic, for which no country was prepared and that upended economies globally.”

Therefore, it is “essential to enable, unlock and mobilise private capital as a matter of urgency.”

 

Three-pronged approach

To do this, Green suggests a three-pronged approach.

First, “we need cooperation between financial advisories, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks and auditors, to help unlock and mobilise the trillions of dollars of private finance that is urgently required.”

Second, “a global regulatory framework for environmental, social and governance (ESG) investing is urgently required to further boost confidence and protections for investors.”

And third, “all climate risk and vulnerability data must be made immediately available by governments and their agencies in order to further strengthen the case for ESG-orientated investments.”

The deVere CEO’s calls follow the organisation’s pledge to position $2 bln of assets under advisement into ESG investments within five years.

The Group is one of 18 founding signatories of the UN-backed Net Zero initiative, the international alliance of powerhouse finance companies that will help accelerate the transition to a net zero financial system. Its membership means it is committed to “aligning all relevant products and services to achieve net zero greenhouse gases by 2050 and to set meaningful interim targets for 2025.”

Green concluded that climate change “remains the most serious risk multiplier to our planet, to our communities, and to our way of life.

“Failing to understand the magnitude of it now is going to have catastrophic, irreversible consequences later.”