Public-Private Decarbonization
Photo by Porapak Apichodilok
BY LAURA TYSON , DANIEL WEISS
BERKELEY – As we mark the 52nd Earth Day, we must recognize that achieving net-zero carbon dioxide emissions by 2050 will require significant investment to finance the necessary economic and social transitions. McKinsey estimates that this will take $9.2 trillion of annual global investment over the next 30 years – an increase of $3.5 trillion per year from what is spent today on clean, renewable energy.
Most of these investments will come from the private sector, which is already leading the charge. The value of assets under management with net-zero commitments is now $57 trillion. The 450 members of the Glasgow Financial Alliance for Net Zero, representing more than $130 trillion in assets, have pledged to align their portfolios with the Paris climate agreement’s 1.5° Celsius warming target. The First Movers Coalition (whose founding members include companies like Amazon, Apple, Boeing, Trane, and Volvo) has pledged to create demand for early-stage clean technologies in “hard-to-abate” sectors like steel, cement, and aviation. In the United States alone, private investment in clean-energy assets reached a record $105 billion in 2021, 11% higher than in 2020 and up 70% over the previous five years.
Moreover, last fall, the International Financial Reporting Standards Foundation created a new International Sustainability Standards Board to develop industry-specific climate disclosure guidelines that will build on reporting standards developed by the Sustainability Accounting Standards Board. By the end of 2021, 258 institutional investors, representing $76 trillion in assets, had adopted the SASB’s voluntary standards. And, in a significant policy move, the US Securities and Exchange Commission recently proposed new rules that would require public companies to disclose information about their carbon emissions and their plans for addressing climate-related real asset and transition risks.
Read the rest of the article on Project Syndicate.
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Laura Tyson, a former chair of the President’s Council of Economic Advisers during the Clinton administration, is a Distinguished Professor of the Graduate School at the Haas School of Business at the University of California, Berkeley, and a member of the Board of Advisers at Angeleno Group.
Daniel Weiss, Co-Founder and Managing Partner of Angeleno Group, is Co-Chair of the UCLA Institute of Environment and Sustainability Advisory Board and serves on the board of the World Resources Institute.
This article was originally published by Project Syndicate.
The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of the Pacific Council.
