This article summarises a keynote session at GIC Insights 2021 with Michael R. Bloomberg, Founder, Bloomberg L.P. and Bloomberg Philanthropies, and three-term Mayor of New York City. The conversation focused on mobilising capital to deal with climate change and other key issues like public health, and was moderated by Lim Chow Kiat, CEO of GIC.
Climate change and capital
Climate change has become an issue at the top of the global agenda for governments and companies. More and more companies incorporate Environmental, Social and Governance (ESG) criteria into their strategies and business practices. Investors increasingly consider both returns and ESG outcomes in their decision-making processes, and are taking into account ESG concerns even when it comes to hiring decisions or potential media coverage.
Recent events like the United Nations Climate Change Conference (COP26) in Scotland have emphasised the need to take urgent climate action. The vast majority of global GDP is now covered by a commitment to reach net zero emissions. But while commitments are a positive sign, they are merely a first step that must lead to action.
Financing the global transition to clean energy will cost trillions of dollars in new investments and much will have to come from the private sector, particularly after the devastating effect that the pandemic has had on public budgets. While these new investments will be an enormous opportunity that will see new companies formed to deal with the impact of climate change, whether they will be able to successfully stop runaway climate change is uncertain. Speeding up the rate of investments in the private sector to aid these efforts will be crucial.