By Nikos Avlonas, President and Founder of CSE
The necessity of a Just Transition is rising up the agenda of investors and policy makers. It has already become an integral part of many of the global commitments adopted by countries as it is strongly linked to 14 of the 17 Sustainable Development Goals, drawing together the following SDGs: 12 – climate action, 10 – reduced inequalities, 8 – decent work and economic growth and 7 – affordable and clean energy. Whilst it is mainly based on environmental considerations, just transition is also shaped by other structural changes, affecting labor markets.
To have a better understanding of the investors’ intentions, some of the previous year’s highlights follow below.
2022 will be a critical year with financial institutions and listed companies preparing their net zero plans in order to be published one year later. COP26 was a milestone for investors’ agenda. Financial institutions, representing $130 trillion in capital, have signed the Glasgow Financial Alliance for Net Zero, a global alliance of banks, insurers and investors. They have committed to deliver the $100 trillion investment needed to achieve net zero over the next three decades.
The alliance is taking a number of measures to accelerate the global transition, which is putting even more pressure on high-carbon companies. However, this is not the only pressure they have to overcome. Investors need also to ensure that companies aren’t exaggerating or misrepresenting the benefits of their activities. This is the phenomenon known as “greenwashing”.
In addition, sustainable bond issuance set an all-time record globally in 2021, surpassing $1 trillion for the first time ever, a 45% increase over 2020, while more than $517bn of green bonds were issued by investors last year. This is a 50% increase on 2020 levels and a 343% on 2019 levels, showing that the demand of institutional investors for green, social, and sustainable bonds that bring clear environmental and socio-economic benefits shows no sign of waning.
Investors have been stepping up their work to respond to the risks and opportunities of climate change. To address the challenges, their strategies need to incorporate the full range of environmental, social and governance (ESG) dimensions of responsible investment.
Develop expertise in ESG, by attending CSE’s flagship course, the Certified Sustainability ESG Practitioner Program, LEADERSHIP EDITION 2022, Digital Version on April 7-8 & 11. The Leadership Edition is designed for CEOs, corporate leaders and C-suite executives with more than 10 years of working experience in the field, who want to reach new highs in their sustainability ESG strategy.