| Summary/Abstract |
Combating climate change at a global scale requires dramatic
mobilization of capital markets. By 2035, more than $53 trillion will need to
be invested in energy supply and efficiency in order to achieve climate targets
laid out in the 2015 Paris Agreement. Interest and participation in sustainable
finance continues to grow: environmental, social, and governance (ESG)
investing assets under management totaled $30.7 trillion (of which $1 trillion is
specifically classified as sustainability-themed) at the start of 2018, representing
a 34% increase over the preceding two years. Yet, the capital that is available
for investment in sustainable assets may not be well-matched with the pipeline
of projects in search of financing. Green asset classes, including renewable
generation, infrastructure, energy efficiency, and clean transport, are often
inherently novel, small, and/or disaggregated. This makes them difficult and
expensive to combine into investment-ready formats, preventing capital from
being deployed on the timescale required to enable a quick energy transition.
Moreover, market barriers exist with respect to early-stage financing and proving
the viability of new markets and business models. In this article, we explore
the hurdles and barriers that financial actors must overcome to ensure efficient
capital matching that bridges the gap between climate awareness and meaningful
climate investment
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