Greenwash activists take part in the final day of four days of The Big One climate protest activities organised by Extinction Rebellion (XR) on 24 April 2023 in London, United Kingdom.
Mark Kerrison | In Pictures | Getty Images
The head of the United Nations Environment Programme Finance Initiative believes there is still a “real challenge” in scaling the flow of investment to companies that are transitioning to become greener.
Eric Usher, who heads up the UN partnership with banks, insurers and investors, said that there are areas more clearly understood to be green investments — such as renewable energy — which are “mobilizing a lot of capital today.”
“The money is starting to move away from the really non-green stuff. But the real challenge is everything in between — some would say the ’50 shades of green’,” Usher said during a “IOT: Powering the Digital Economy” panel moderated by CNBC’s Steve Sedgwick at this year’s World Economic Forum in Davos, Switzerland.
This refers to companies still working toward making their businesses more sustainable, making them more difficult to label as truly green investments, according to Usher.
“If you’re going to work in helping deal with heavy emitting sectors and you’re going to put more capital in to help them reduce [emissions], that’s going to increase your emissions profile,” he explained.
“So there’s a lot of definitional stuff that’s needed before the capital is going to flow really at scale,” Usher added.
The UNEP FI was founded in 1992 and says on its website that it was the first organization to engage the finance sector on sustainability. Amid the onset of the Covid-19 pandemic, sustainability issues and investment moved firmly into the spotlight as investors poured money into newly set up funds.
More and more businesses strived to make their businesses more sustainable amid severe weather events across the globe. But signs of a so-called “greenlash” have been growing across places like the U.S. and Europe as the cost of implementing environmental policies has faced resistance from citizens, prompting some governments to water down their targets.
Net-zero work ‘hasn’t stopped’
The rise of artificial intelligence dominated discussions at this year’s WEF summit earlier this month. In fact, a WEF report ranked AI-derived misinformation and disinformation top of a list of the biggest risks for 2024, ahead of climate change.
During Wednesday’s panel, Usher acknowledged that the discussion at Davos around net-zero emissions had been “a little bit less prominent than maybe in recent years but what we see under the hood is that the work hasn’t stopped.”
Usher suggested that while a more complicated geopolitical environment was also more in focus for investors, sustainability was still a priority because it focused on the future of their businesses.
He said that “this is about doing business and this is about how a bank, or an investor, or an insurer, or actors in [the] real economy say, ‘well this is about our future’ … And the question is: Are you going to be a future taker or are you going to be a future maker?”
Speaking separately to CNBC at Davos, Mark Carney said that he believed sustainability “hasn’t slipped down the agenda of investors.”
Carney, who is currently the United Nations special envoy on climate action and finance and formerly the governor of the Bank of England, said that investment in clean energy grew by 50% in 2023 to $1.8 trillion, up from $1.2 trillion in 2022.
“There’s a huge surge in investment in clean energy, in EVs, [electric vehicles] in the whole supply chain,” he said.