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Impact is more important than league tables

Excited young brother and sister running from their township

28 Sep 2020

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The growth of sustainable finance has been good news in an otherwise challenging year. This momentum is needed but building back better will require the finance sector to recognise that impact matters just as much as volume.  ‘Where’ may be more important than ‘how much’.

A dollar invested can have a significantly different outcome depending on where and how it is deployed. As our first sustainable finance impact report (PDF, 1.3MB) highlights, financing a solar project in India will help avoid more than seven times the CO2 from a similar-sized project in France given the current sources of power on those countries’ grids.

Catalyse, standardise and democratise

In order to finance change, we need to switch the focus from green bond league tables to how we catalyse, standardise and democratise sustainable finance:

Flowing funds to emerging markets

Less than 60 per cent of the financing needed to achieve the SDGs in low and middle-income countries is being met. In Africa, this is as low as 10 per cent. This is why we are proud that out of our USD3.9 billion of verified sustainable financing, 91% is in emerging markets and 86 per cent is in some of the world’s least developed nations.

Asia is home to 80 per cent of the world’s population who may be flooded if there is a 3°C rise in global temperatures, while Africa has at least 19 coastal cities with a population of more than 1 million at risk from climate change. Billions in these markets face this stark reality if we cannot move capital from Lyon to Lucknow. Financing this change is also a USD10 trillion opportunity for investors.

Getting this right is far more important than league tables.

Wind power in the high mountains