How Investment Funds Can Drive the Green Transition

2021-10-12T14:40:12-04:00October 4, 2021|

By Fabio Natalucci, Felix Suntheim, and Jérôme Vandenbussche

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Sustainable investment funds need to be scaled up to support a successful transition to a green economy.

The transition to net-zero greenhouse gas emissions requires unprecedented change by companies and governments, as well as additional investment of as much as $20 trillion over the next two decades. Strong fiscal policies, complemented by a broad range of regulatory and financial policies, will be necessary to facilitate the green transition.

The world’s $50 trillion investment fund industry, especially funds with a sustainability focus, can play an important role financing the transition to a greener economy and helping to avoid some of the most perilous effects of climate change, according to our recent analysis as part of the IMF’s Global Financial Stability Report.

Net flows into sustainable funds increased notably in 2020.

Sustainable funds differ from conventional funds because they have a sustainability objective while also seeking financial returns. Within this broad class of funds, some funds are more narrowly focused on the environment, and a further subcategory is concerned with climate change mitigation specifically.

Climate stewardship and firm financing

The positive role of funds comes […]