The Oz: climate change as business opportunity – where to next?

The transition to carbon neutrality will require trillions. For the financial sector this means not just the opportunity to fund the future, but to profit from it.

The Australian Business Review: For bankers all around the world, the realisation has dawned that climate change is a business opportunity, not just an existential risk. It’s hardly surprising: people with a nose for productive economic activity tend to start twitching when figures along the lines of $US125 trillion ($177 trillion) – the estimated cost of the global transition to carbon neutrality by 2050 – are bandied around.

A report by the McKinsey & Co unit Vivid Economics for the United Nations breaks down the $US32 trillion annual figure into six key sectors – electricity ($US16 trillion), transport ($US5.4 trillion), buildings ($US5.2 trillion), industry ($US2.2 trillion), and low-emission fuels and agriculture and forestry ($US1.5 trillion each). To reach $US125 trillion by 2050, investment for decarbonisation needs to triple in 2021-25 compared with 2016-2020, then average $US4.5 trillion a year after 2026.

Vivid says private actors can provide 70 per cent of the financing required until the end of the decade, offering “huge” opportunities for investors.

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