Third of EU-US green investment needed to reach net zero aims

BNY Mellon Investment Management (BNYMIM) analysis indicates that a third, or 33%, of the investment required to fulfil net-zero goals must be spent in the EU and the United States combined.

The report, titled "An investor's roadmap to Net Zero by 2050," indicates that the world economy is significantly behind track for achieving net-zero targets by 2050, but the gap may be closed with $100 trillion in green investment.

Additionally, 3.5% of that investment will be necessary in Germany, 2.6% in the United Kingdom, 2.5% in France, and 2.1% in Italy.

According to the analysis, more than half will be required in emerging markets, and over a quarter in China alone.

Chief economist at BNYMIM, Shamik Dhar, said: “Achieving net zero by 2050 will require transformational investment, but it is attainable. Get it right and the payoff to society and investors can be substantial. Investment is just one side of the coin.

There have been suggestions for a worldwide carbon price, but we believe a coordinated approach is improbable, thus other incentives must be considered. Governments must stimulate and incentivize private sector investment while reducing transition risks via policy levers, he noted.

Kristin Church, global head of responsible strategy at BNYMIM, described divestment as a "very last choice" if companies fail to shift.

"Engagement enables the allocation of money to the industries and regions with the greatest need. Here are the greatest transitional possibilities for investors, she explained. “

As responsible investors and custodians of our clients' capital, we place a high value on businesses with viable transition plans. Continuous dialogue with the public sector and businesses is essential for ensuring a just transition."

Europe is responsible for 8.5% of global carbon emissions at present.

By fLEXI tEAM