Towards a green economy Key messages

1. A global green economy transformation will require substantial financial resources. Indicative figures such as those from the International Energy Agency’s (IEA) scenarios for halving worldwide energy-related CO2

emissions by 2050 and on modelling, in this report, show additional

investments required will likely be in the range of 1 to 2.5 per cent of global Gross Domestic Product (GDP) per year from 2010 to 2050. A considerable amount of investment will be needed in energy supply and efficiency, particularly in greening the transport and buildings sectors.

2. Financial investment, banking and insurance are the major channels of private financing

for a green economy. The financial services and investment sectors control trillions of dollars that could potentially be directed towards a green economy. More importantly, long-term public and private institutional investors, banks and insurance companies are increasingly interested in acquiring portfolios that minimise environmental, social and governance risks, while capitalising on emerging green technologies. Microfinance has a potentially important role at the community and village level to enable the poor to invest in resource and energy efficiency as well as increase their resiliency to risk.

3. Opportunities exist to meet the financing needs of a green economy. The rapid growth and increasingly green orientation of capital markets, the evolution of emerging market instruments such as carbon finance and microfinance, and the green stimulus funds established in response to the economic slowdown of recent years, are opening up space for large-scale financing for a global green economic transformation. But these flows are still small compared to investment needs and must be scaled up quickly if the transition to a green economy is to jump-start in the near term. Concentrated pools of assets, such as those controlled by pension systems and insurance companies, the US$ 39 trillion-plus controlled by the high net worth community and the growing assets of sovereign wealth funds will need to support the green economy in coming decades.

4. Advances in disclosure and sustainability reporting are increasing transparency and

driving change. In 2009, the global market size for institutional assets was estimated at just over US$ 121 trillion. Of the actively managed components of these assets, controlled by a broad range of large institutional investors, some 7 per cent was subject to the integration of environmental, social

588