Nick Robins, professor in practice for sustainable finance at the Grantham Research Institute at the London School of Economics, believes that finance is finally ready to transform for a net zero and resilient world.

Current crises have made COP27 an odd place to believe that it could signal the point of transforming the financial system, with war, energy, food, inflation and public finance crises, but these crises are also adding to momentum to speed the shift to an efficient and renewable energy system and reinvest in the natural systems that underpin food security and resilient infrastructure.

As an example, Robins sees leading voices from governments and from the financial sector acknowledging the need for system change. Barbados’ Prime Minister Mia Mottley’s Bridgetown Agenda seeks to overhaul the global financial architecture: “the establishment of a climate mitigation trust that unlocks $5tr of private sector savings”. Another example is from within the financial sector, with the CEO of Aviva Investors Mark Versey describing the global financial architecture as “not fit for purpose”.

With a new climate finance goal needed from 2025, COP27 needs to consider the $100bn benchmark and scale up international climate investment into developing countries. The Finance for Climate Action report sets out how to channel $1tr a year in international public and private climate investments into the developing world by 2030. This would involve tripling the annual flows from multilateral development banks in the next five years and doubling concessional finance from developed countries by 2025 from 2019 levels. Rising indebtedness also needs to be confronted, and here developing countries have proposed a grand-scale climate-debt swap to cut debt payments in return for spending on their own plans for climate resilience and prosperity.

But Robins notes that finance is still largely misaligned with climate change goals. The remain provisional and even if it is clear that a ‘finance as usual’ approach will not work success will require all forms of finance to “stretch beyond their comfort zones”.

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