The sustainable investment industry is too small to drive the global transition to a low-carbon economy and to help it grow, governments must do more to protect investors from deception by greenwashing, the IMF said on Monday.
Assets in sustainable investment funds have doubled in the past four years to about $ 3.6 tons, the IMF noted in its biannual Global Financial Stability Report. But by 2050, massive new investments amounting to $ 20 tons will be needed to achieve the goal of reducing global carbon emissions to zero by the middle of this century. It is expected that about 70 percent of this additional funding will come from private sources.
Achieving this range of expansion will require savers and investors to thoroughly understand how their money is being spent, the IMF suggested, and called on regulators to prevent financial companies from making misleading claims about their environmental evidence.
“Proper regulatory oversight and verification mechanisms are essential to prevent greenwashing,” he said.
The IMF said that growth in sustainable funds could be accelerated if policymakers harmonized standards for climate change and developed new green frameworks to help direct investment flows to projects such as renewable energy infrastructure.
“The sector for sustainable investment funds can be an important driver for the global transition to a green economy, but is currently too limited in size and scope to have a major impact. A green investment pressure is therefore essential and urgent to facilitate the transition, “the IMF said.
It noted that climate-focused funds account for only $ 130 billion of assets in sustainable investment strategies that use a variety of environmental, social and governance statistics.
Tax cuts can also encourage climate-themed funds in retirement savings schemes or life insurance products purchased by retail investors, but only after improvements in reporting standards and regulatory oversight have been established.
The British government hopes to generate billions of pounds of new green investment after inviting the bosses of BlackRock, Blackstone, Goldman Sachs and JPMorgan to a summit ahead of the UN COP26 climate conference to be held in Glasgow next month.
More than 200 top financiers are expected to attend the event, including Barclays boss Jes Staley, the new CEO of Lloyds Banking Group Charlie Nunn, chairman of Santander Ana Botín and Peter Harrison, boss of asset manager Schroders, as well as representatives of sovereign wealth funds. such as GIC and Mubadala.