Investment funds industry must help to finance green transition, IMF says

The International Monetary Fund said on Monday that the sustainable investment industry must put efforts to help alleviate the effects of climate change.

In its semi-annual Global Financial Stability Report, the IMF noted that assets in sustainable investment funds have doubled over the past four years to about USD3.6tn. However, investments up to USD20tn will be required by 2050 in order to attain the goal of reducing carbon emissions to net zero.

To reach this expansion, IMF suggests that savers and investors will need to remain on track with their money by calling on regulators to prevent financial companies from making misleading claims concerning their environmental credentials.

“These investments would need to be orientated away from the fossil fuel sector and towards renewables as well as towards low-emissions solutions within sectors,” the IMF said in the green economy transition chapter of its World Economic Outlook report.

As the aims of attaining a net zero-carbon by 2050 get higher, efforts by countries and companies all over the world are being set up. Nevertheless, the question of whether there will be sufficient support from investors and lenders to boost the transition has risen.

In September, more than 600 business leaders called on the G20 economies to end support for coal and halve emissions by 2030.

“The sustainable investment fund sector can be an important driver of the global transition to a green economy but, at the current juncture, is too limited in size and scope to have a major impact. A green investment push is thus essential and urgent to facilitate the transition,” the IMF said.

The British government hopes to generate billions of pounds of new green investment, after inviting the bosses of BlackRock, Blackstone, Goldman Sachs and JPMorgan to a summit ahead of the UN COP26 climate conference, which will be held in Glasgow next month.