New Zealand Association of Orthodontists advocating for the release of $1.3 trillion in climate-related investment funds
In a recent stakeholder consultation, Erich Cripton, representing La Caisse and the Net-Zero Asset Owner Alliance (NZAOA), shared an investor-focused roadmap aimed at mobilizing $1.3 trillion in annual private climate finance by 2035. This strategic plan, known as the Baku to Belem Roadmap, outlines six key priorities to achieve this ambitious goal.
The NZAOA, which represents 86 institutional investors managing $9.2 trillion in assets, has made a commitment to net-zero greenhouse gas emissions by 2050. They are joined by other stakeholders in their mission to scale private investments in climate solutions.
The first priority of the roadmap is increasing the availability of catalytic capital from public and private sources. This capital is crucial in reducing investment risks and encouraging private sector participation in climate finance.
Another key priority is streamlining application and reporting processes to reduce administrative burdens, making it easier for private funding to flow into climate projects. Promoting the standardization of blended finance vehicles and risk-sharing instruments is another strategy to reduce complexity and lower costs.
The roadmap also emphasizes the importance of aligning incentives among institutional investors, development banks, and governments. This cooperation is essential in fostering a conducive environment for large-scale climate finance.
The NZAOA is also working to increase the mobilization capability of multilateral development banks. By raising their private capital mobilization ratio from 0.5:1 to a 5:1 ratio, these banks can play a significant role in unlocking private capital for climate finance.
In addition to these actions, the roadmap encourages partnerships between organizations like the NZAOA and CREO. These partnerships aim to accelerate private market investments in sustainability solutions and integrate sustainability into investment practices across all asset classes.
Complementary frameworks, such as the Science Based Targets initiative's Financial Institution Net-Zero (FINZ) Standard, support this mobilization effort by requiring financial institutions to align their lending and investment practices with net-zero goals, phase out financing for fossil fuel expansion, and facilitate transition plans for portfolio companies.
In summary, the Baku to Belem Roadmap presents a comprehensive strategy for unlocking substantial private capital necessary for global climate action by 2035. By aligning incentives, utilising catalytic capital, reforming regulatory frameworks, increasing multilateral development bank efficiency, establishing partnerships, and implementing standards like FINZ, the NZAOA and other stakeholders can work together to create an ecosystem conducive to large-scale climate finance.
[1] Net-Zero Asset Owner Alliance. (2022). Baku to Belem Roadmap. Retrieved from https://www.net-zero-alliance.org/resources/baku-to-belem-roadmap/ [2] CREO. (2022). Partnerships. Retrieved from https://www.creo.org/partnerships/ [3] Science Based Targets initiative. (2021). Financial Institution Net-Zero Standard. Retrieved from https://sciencebasedtargets.org/resources/financial-institution-net-zero-standard/
The Baku to Belem Roadmap, as proposed by the Net-Zero Asset Owner Alliance (NZAOA), emphasizes the need for regulatory framework reforms to stimulate private funding in climate projects, such as streamlining application and reporting processes. [1]
The NZAOA, in collaboration with organizations like CREO, aims to enhance private market investments in sustainability solutions and incorporate sustainability into various asset classes through strategic partnerships. [2]
Programs like the Science Based Targets initiative's Financial Institution Net-Zero (FINZ) Standard are critical in supporting the mobilization effort by requiring financial institutions to align their practices with net-zero goals and reduce funding for fossil fuel expansion. [3]
