A new report has concluded that $7.7 trillion is needed in investments into renewable energy and energy efficiency to meet the electricity demands of China, India, Japan, and Southeast Asia if the world is to avoid surpassing global warming of a 2°C above pre-industrial levels.
The report, Investing for the climate in Asia, was released in conjunction with the launch of the new Asia Investor Group on Climate Change (AIGCC) this week. The report is “the most comprehensive analysis to date of climate finance sector activity in Asia,” and was undertaken by Asia Research and Engagement (ARE) with the support of the Australia and New Zealand Banking Group Limited (ANZ). The report reviewed the disclosure of leading domestic financial institutions across the Asia Pacific region (in total, 36 banks, 30 investors, and 24 insurers) in an attempt to accurately determine the state of the finance industry’s response to climate change in the region.
The report concluded that a “significant shift toward embedding climate risk and responsible investment into core business activities” is ongoing, but that “much remains to be done.”
“We know that between 2014 and 2035, $7.7 trillion is needed for renewable energy and energy efficiency to meet the demands of China, India, Japan, and Southeast Asia if the world is to meet a 2°C warming target,” said Emma Herd, CEO of the Investor Group on Climate Change (IGCC). “The finance sector has recognised the opportunity and is gearing up fast. While it’s clear that progress is uneven and gaps remain, such as a need for greater focus on climate risk in investing, progress over the past two to three years has been remarkable. There’s no doubt that a great transition is on.”
“Nations across the Asia Pacific are critical in the global effort to tackle climate change,” the authors of the report noted, adding that a large number of Asia Pacific countries “are investing in the policy framework and commitments necessary to drive investment into climate solutions.”
31% of the institutions analysed in the new report factored climate change risk into their financing operations. Over a quarter of the banks analysed referred to climate change factors as a reason to limit financing, and 81% disclosed their policy on responsible lending.