Torry Berntsen of Standard Chartered discusses the need for global organisations to support emerging markets in their decarbonisation process
There is no doubt that tackling climate change is a top priority on everyone’s agenda. The frequency and severity of climate events is felt widespread – impacting infrastructure, critical services, and even leading to loss of life. It is estimated that economic and ecological damage of climate events costs nearly $1.3tn per year.
The transition to reach net zero and keep global warming under 1.5°C is a challenge. It requires vast sums of capital to be invested to achieve lower carbon energy and land systems. At Standard Chartered we recently published a report “Just in Time”, where we estimate that $94.8tn of financing is required to reach net zero across the emerging markets – a sum higher than the annual global GDP.
As a bank, we are committed to supporting emerging markets achieve net zero, whilst also ensuring climate objectives are met without depriving countries of their opportunity to grow and prosper. To mobilise the investment required to achieve net zero, significant financing is required from both the public and private sector. Equally, governments must engage through creating supportive policy and regulatory environments that are attractive for investors.
The range of financial structures and risk mitigation tools will be critical for investors. To illustrate this, investors with a lower risk appetite may opt for highly structured infrastructure projects which are designed to offer stable, long-term returns with little volatility.
"Collectively, we can deliver a just transition to net zero"
As an example, we recently supported a material infrastructure project in Cameroon, partnering with the UK Export Finance agency to arrange €135m of financing. This allowed us to include comprehensive risk guarantees and unlock private capital to fund the project.
There is a clear need for investment in new technologies that can be scaled for global adoption, as well as consistency in reporting – this includes transparency around the use of proceeds. As data improves, confidence in supporting investment across the emerging markets will also improve. Aligning the approach between governments, private, and public sectors will be paramount.
At Standard Chartered, we believe we have a key role to ensure sufficient capital is directed across the emerging markets to support decarbonisation. We have pledged to mobilise finance and partnerships to scale impact, capital, and climate solutions to where they are needed the most, through $300bn in transition finance. Collectively, we can deliver a just transition to net zero to avoid a climate emergency, which will impact us all.
ABOUT THE AUTHOR
Torry Berntsen is CEO of Standard Chartered for Europe & Americas and is based in London. He is responsible for all aspects of the region, providing leadership on strategy, client relationships, risk management, governance, and regulatory engagements.