What drives rational investors to allocate capital toward assets that are not aligned with sustainability goals?
Sharing report from the Global Sustainable Investment Alliance (GSIA) that addresses this exact fundamental question. The report is called "Transforming Global Finance for Climate Action: Addressing Misaligned Incentives and Unlocking Opportunities."
The report urges policymakers and finance leaders to tackle the critical disconnect between investor and policy incentives. Closing this gap is essential for accelerating sustainable finance and mitigating climate risks.
Primary barriers to sustainable capital flows include:
- Policy Gaps: The absence of clear, supportive policies for sustainable finance.
- Profit Priorities: Focusing on immediate returns rather than long-term sustainable gains.
- Valuation Gaps: Overlooking or undervaluing environmental and social impacts.
- Ownership Structures: Passive investment strategies limit the drive for meaningful change.
- Transition Challenges: Difficulties in transitioning certain sectors and business models to sustainability.
What are your views on these and how do you envision the change can happen?
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Aya Pariy
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