A third, or 33%, of investment required to meet net zero targets must be spent in the EU and US combined, according to BNY Mellon Investment Management (BNYMIM) research.
The research, titled ‘An investor’s guide to Net Zero by 2050’, suggests the global economy is drastically behind schedule in reaching 2050 net zero goals but that the gap may be bridged with $100 trillion of green investment.
Further, 3.5% of that investment will be required in Germany; 2.6% in the UK, 2.5% in France and 2.1% in Italy.
More than 50% is expected to be needed in emerging markets, and nearly a quarter in China alone, according to the report.
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.
“Wider policy action is needed to accelerate the pace of decarbonisation and there have been calls for a global carbon tax, but we think a coordinated approach is unlikely, so other incentives must be considered. Governments need to encourage and incentivise private sector investment whilst alleviating transition risks through policy levers,” he added.
Global head of responsible strategy at BNYMIM, Kristina Church, explained divestment was a “very last resort” should companies fail to transition:
“Engagement allows for the directing of capital to the sectors and geographies that need it most. This is where the biggest transition opportunities for investors lie,” she said.
“As responsible investors and stewards of our client’s capital, we see significant value in companies with credible transition plans. Continuous engagement with the public sector and corporations is key to ensure a just transition.”
Europe is currently responsible for 8.5% of global carbon emissions.
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