COP27 Created Three Specific Opportunities for Impact Investing says Allianz GI

COP27 hosted by Egypt focused on translating ambition on climate change into action, that theme, according to active asset manager Allianz Global Investors offers a trio of opportunities for impact investing.

Matt Christensen, Global Head of Sustainable and Impact Investing at Allianz GI highlighted these opportunities at a recent ESG-focused discussion in Singapore.

Christensen highlighted that there are themes, such as climate adaptation, that have received more attention and therefore will need more investment support moving forward. At present, he noted that 90% of climate finance targets mitigation activities rather than adaptation, and impact investing can increasingly play a role to fill the adaptation finance gap.

The first example is sustainable agriculture, which both enables climate adaptation and mitigation at the same time. He pointed to several announcements at COP27 that will help push momentum on this front, including the Food and Agriculture for Sustainable Transformation, and the Agriculture Innovation Mission for Climate.

Secondly, the impact investing ecosystem should be bolstered by growing policy support. Countries such as the UK and Germany made sizeable commitments during COP27 on areas such as green tech innovation, the protection of ecosystems and schemes to help countries facing heavy economic losses due to climate change.

These developments should all contribute towards the continuous strengthening of the overall impact investing ecosystem – whether it is developing the impact investing measurement frameworks, expertise, or talents globally.

Thirdly, Christensen expects public-private partnerships to play an increasingly important role in impact investing. One such method to encourage investment is through blended finance, which could help de-risk investment opportunities and lead to increased investments from private capital.

With increasing support from the public sector and with increasing appetite for partnership from the private sector, it is expected to see more blended finance solutions leveraged to bring about impact.

Asia Well-positioned

Under a high emissions scenario, dangerous heat, flooding and habitat shifts would become prevalent across Asia. In particular, every Asian country would see outdoor working hours affected by extreme heat and humidity by 2050, with flood risks and land surface biome shifts also being particularly acute.

Biodiversity is also a concern in the region. 63% of Asia’s GDP with circa US$19 trillion of economic output at risk from nature loss, a higher proportion compared to the global average.

However, nature-positive development in Asia could unlock US$4.3 trillion of annual business opportunities and 232 million jobs by 2030.

Despite this, the market size for green businesses in Asia is expected to reach between US$4 trillion and US$5 trillion by 2030, with strong potential in sectors such as transport, power and buildings.

Commenting on Asia’s ESG development, Jonathan Ho, Sustainability Specialist at Allianz GI, said: “We increasingly see different ESG regulations covering asset managers emerging in different markets within Asia. Harmonization of standards, to the extent possible, would allow the overall regulations regime to be more effective and efficient.

“Furthermore, we believe the ability of asset managers to incorporate sustainability into investing is closely interlinked with investee companies’ provision of quality and comparable sustainability disclosures as well as their willingness to make improvements.”

“Therefore, we hope to see an increased robustness of ESG regulations covering corporates in Asia as a critical supplementary piece to the overall regulatory regime for the investment ecosystem,” added Ho

#Biodiversity #SustainableAgriculture