Insights

Financing Climate Resilience: Practical Considerations To Enhance Structures In Place Today

Research suggests there is a material gap between the demand for, and supply of, funding for green investment. For example, the Development Bank of Singapore (DBS) estimates that annual demand of US$200 billion in Southeast Asia over the next 30 years will massively outstrip annual supply of $40 billion.

However, polling at the November 2017 G20 Green Finance Conference in Singapore indicated otherwise. During the conference, the audience – composed of finance professionals in the green space – responded to a live polling question: “What is the biggest challenge to scaling up financing for green projects?”

Almost half (44 percent) answered “lack of environmental data,” while 39 percent selected “lack of investible projects”, and the remaining 17 percent chose “inconsistent standards.” Neither “investor demand” nor “maturity mismatch” were picked. This phenomenon points to a paradox at the core of green finance: Top-down estimates suggest a huge need without being matched by sufficient bottom-up funding. Yet when investors were asked the same question, they focused on matters of data, project invisibility, or standards – clearly indicating that the issue for investors is a shortage of demand, rather than supply!

Simply put, the market at present isn’t working, and needs fixing.

To read the full article, download the PDF below.


Peter Reynolds is a Hong Kong-based Partner in the Finance and Risk Practice and Gaurav Kwatra is a Singapore-based Principal in the Finance and Risk Practice at Oliver Wyman.

 

Financing Climate Resilience: Practical Considerations To Enhance Structures In Place Today


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