Is Sustainable Investing Accelerating the Energy Transition?
Energy Transition/Climate & Sustainability
Getting to net-zero greenhouse gas emissions will require trillions of dollars in investments. Fiscal policies, complemented by a broad range of regulatory and financial policies, will be necessary to enable this transition. The global financial industry can play an important role in financing the transition to a greener economy. After years of rapid and consistent growth, ESG investing faced new headwinds in 2022. A surge in sustainability-related funds and products has created suspicions about reporting, standards and greenwashing in many jurisdictions. In the United States, opposition to ESG concepts has driven certain Republican-controlled states to shift some investments and threaten more. At the same time, the oil and gas sector outperformed the market by a wide margin and energy was the only sector within the S&P 500 that generated a positive share price return in 2022. Consequently, there have been increasing questions about the ESG’s relevance amid changing market conditions and how funds will implement their commitments to invest “sustainably.” Is ESG investing suffering from growing pains or is the support wavering? In 2022, large money managers reduced their support for ESG-focused shareholder proposals and industry alliances? How will this impact energy transition investments? Will the focus on energy security and affordability accelerate investments in hydrocarbons and slow down investments in clean energies? How should funding for mitigation and adaptation be mobilized for emerging economies? What regulatory oversight do you support or recommend to prevent “greenwashing”?