Financing the low-carbon economy

Companies and governments around the world need to work together to fund the significant cost of the shift to a low-carbon economy, according to HSBC Group Chief Executive Stuart Gulliver.

Speaking at the SDG Business Forum during Climate Week in New York, Mr Gulliver said: “There’s no question that the task of providing the finance needed to make the transition to a low-carbon economy is equal in magnitude to any of the great financial shifts in the last 150 years.”

HSBC Global Research estimates that an extra USD300 billion of investment will be needed each year between now and 2020 to ensure that new infrastructure is environmentally sustainable.

Mr Gulliver said that the public and private sectors should share the risks and costs – as well as the benefits – of moving to a low-carbon economy. Investment in better infrastructure and low-carbon energy requires certainty on policy and a clear understanding of climate risk, he said. It also requires transparency and consistent disclosure so that investors can clearly understand how their money will be spent.

He pointed to the fact that HSBC’s Global Asset Management business has recently signed the Montreal Carbon Pledge, which commits the bank to measure and publicly disclose the carbon footprint of its investment portfolio on an annual basis.

Mr Gulliver also discussed the role banks including HSBC are playing in developing the market for green bonds. Last year, for example, HSBC helped the International Finance Corporation issue the world’s first renminbi green bond.

But no single sector of the global economy can finance the change to a low-carbon economy alone, Mr Gulliver argued.

“We can’t assume that the answers will come from more developed economies or that governments alone can bring about change,” he said. “It requires a truly global effort that spans public and private sectors, new and old industries, and developed and developing markets.”

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