ESG Insights: Trends, Analysis & Our Featured Chart #4

An imagined car covered in green grass in front of a cloudy sky
For financial professionals only

In this update there’s good and bad news for regulation and green development.

While it’s positive to see the EU reach a net-zero deal on clean-tech, the US prevented increased climate accountability in global finance. While electric vehicles are starting to reach mass-adoption levels, the world is still falling short on its green investment funding, with an increase in private credit fossil fuel deals.

The key takeaways: 

  • Electric cars on the move - Bloomberg analysis shows that thanks to improved costs, performance, and infrastructure, over 5% of new cars in 31 countries are now electric – passing a tipping point into mass adoption and signalling a rapid move into the mainstream.
  • Europe’s Net-Zero deal – the European Council and the European Parliament reached a provisional deal on the Net-Zero Industry Act - a key piece of regulation aimed at expanding clean energy technologies.

  • US officials reject global disclosure on climate strategies – as part of the Basel Committee supervisory group, European banks pushed to force lenders to disclose their climate strategies within global financial rules, but faced opposition from the Federal Reserve, which deemed it as overstepping and exceeding authority.

  • Lack of green investment puts 1.5°C goal at risk – a new report by renewables think tank REN21 shows that while $600 billion was invested in renewable energy in 2023, we’re still falling significantly below the estimated $1.3 trillion a year needed by 2030 to meet the Paris-Agreement goal.

  • Private Credit managers increase fossil fuel lending – as banks exit more deals due to climate risk concerns, some private credit managers are looking to fill the gap – but this can come at a greater cost for the companies involved.

Featured Chart

The graph below illustrates that transitioning to a low-carbon economy can save more money in avoided damages than it costs. 

Source: IMF, NGFS, 2023. Reference scenario based on current policies with no transition but physical risk. 

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Why’s this worth sharing?

Reducing emissions now will lessen the physical impact of climate change, which will save money in the long run. Moving towards a low-carbon world isn't just necessary, it's also good for the economy.

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.  

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