Only a rapid transition to a low-carbon economy will prevent dangerous climate change and its catastrophic consequences. Conventional approaches to climate change mitigation emphasize the roles of international treaties such as the Paris Accord, action by national governments, and sub-national initiatives by cities and others. Until recently, these conventional approaches have failed to recognize the central importance of the financial sector in facilitating a rapid and deep low-carbon transition. Not only does the financial sector have an exceptional capacity to accelerate climate change action, but it interacts with all other sectors and exerts an increasing influence over many of them.
However, the task of transforming the financial sector from a high- to a low-carbon trajectory is a daunting one that will require vast amounts of finance: an estimated $93 trillion in US dollars by 2035 (UNESCAP 2017)) for climate action, much of which only the private sector has the wherewithal to provide. Scaling up “climate finance” – for low-carbon infrastructure, renewable energy, energy efficiency, and other mitigation measures – would involve transforming a sector that has only recently begun its journey toward sustainability. What will be needed is nothing short of a quiet revolution involving massive investments now in long-lived, low-carbon assets and in infrastructure that is resilient to the physical impacts of global heating – in tandem with new business models, extensive innovation, and new technologies.
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