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UN Report Recognizes “Deep Shift” in Low-carbon Economy Investment

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By Arman Kazemi

October 29, 2015

A recent United Nations report suggests that investors across developed and developing economies are recognizing the

But more low-carbon investment is needed to keep global warming below two degrees, according to the study.

Released earlier this month by the United Nations Secretary-General’s climate change support team, Trends in Private Sector Climate Finance found that investments totalling $278 billion were made in the renewable energy sector in 2014 – a 55 per cent increase over 2009 figures – and that “a selection of developing and emerging countries” has been leading the way.

In 2014, 26 countries saw private-sector investments over $1 billion in renewable energy, including 11 developing nations. In 2009, by contrast, only 17 countries had that level of investment.

The report points to five signs that indicate a “deep shift” in attitudes to low-carbon investment:

  • Hundreds of billions of dollars committed to “low-carbon and climate-resilient investments in all parts of the world”;
  • The rise of green bond markets, which were worth USD $36 billion in 2014;
  • The growth of internal carbon pricing schemes, which have tripled in the past year, according to one estimate;
  • Decarbonisation of market portfolios as a result of “increasing concern around the activities of carbon-intensive assets and companies”; and
  • The absorption of climate-related risk factors into insurance policies, with “the proportion of weather-related losses insured in developed countries” having risen from 30 to 50 per cent in the last 30 years

But the report points out several lingering gaps in the private sector’s approach to climate finance.

According to the report’s authors, “investment levels remain too low; not all countries are seeing benefits; and leadership by some in the sector is matched by inertia from others.”

In spite of the private sector’s global response to climate change, the authors note that “overall low-carbon investment levels are currently below those needed to avoid breaching the 2°C threshold this century.”

“We are at the cusp of a new low-carbon economy,” Janos Pasztor, the UN Assistant Secretary-General on Climate Change, told a Chinese news outlet earlier this month.

“Companies that are leading the pack will benefit in the future because they reacted faster than others,” he said. “However, we must now push for a package to come out of the inter-governmental negotiations in Paris in December that will accelerate this whole process."