Insight & Analysis

Press release: Financial institutions can help drive greening of BRI

Published: Jan 2022

14th January 2022 – Advancing the Green Development of the Belt and Road Initiative: Harnessing Finance and Technology to Scale Up Low-Carbon Infrastructure, produced in collaboration with PwC China (PwC), will be released today by the World Economic Forum (WEF).

Newspaper press release

According to the insight report, emerging and developing economies (EMDEs) face rising demand for energy and mobility as they grow, industrialise and urbanise. Today’s infrastructure investment decisions will lock in emissions trajectories for decades and could make or break the world’s ability to achieve the Paris Agreement objective of limiting global temperature from rising to well below 2°C.

The report highlights low-carbon technologies, such as solar and wind power, battery storage and electric vehicles, that are technologically feasible and commercially viable. A surge in Belt and Road Initiative projects that deploy these technologies would be in line with China’s September 2021 pledge to support developing green and low-carbon energy and not build new coal-fired power projects abroad.

“By accelerating the buildout of low-carbon infrastructure, the Belt and Road Initiative can play a leading role in decoupling economic development from emissions growth for emerging and developing economies,” said Raymund Chao, Asia Pacific Chairman, China Chairman and Chief Executive Officer, PwC. “To capitalise on the increasing global appetite for green assets, the financial sector will play a vital role in channelling investment flows towards green energy and transportation projects.”

“This insight report offers an important contribution to low-carbon development in diverse countries along the Belt and Road. It signals that financial institutions and enterprises are taking action now to incorporate environmental and climate risks into their investment portfolios in order to avoid transition risks and improve outcomes for sustainable economies and societies,” said Rebecca Ivey, Chief Representative Officer, Greater China, World Economic Forum.

Financial institutions have a vital role to play in shifting investment flows from brown to green activities, facilitating the low-carbon transition. Green finance mechanisms have grown rapidly over the past decade but remain at a nascent stage. Multilateral public-private collaboration will be needed to overcome substantial risk premiums that hinder the mobilisation of private sector funding in developing economies.

Banks, insurers, asset owners and asset managers are coalescing around frameworks such as the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to measure, manage and disclose their climate risks. In collaboration with initiatives such as the Green Investment Principles (GIP) for the Belt and Road and the Glasgow Financial Alliance for Net Zero (GFANZ), financial institutions are setting targets to reduce their exposure to carbon-intensive sectors and increasing their financing of green activities. The insight report highlights the low-carbon technologies, financial sector players, green financing mechanisms and conducive local policy frameworks that can and need to come together in greening the BRI. It does so with case studies that are based on interviews with GIP signatories and selected companies.

“The low-carbon transition brings new risks and opportunities to us and to our clients. PwC is committed to supporting businesses, governments and society in our collective efforts to decarbonise, and towards making a positive contribution to tackling climate change – arguably the most important problem of our time,” said Amy Cai, Managing Partner – ESG, PwC China.

PwC is taking tangible actions to demonstrate its own commitment to driving sustainable outcomes. In September 2020, PwC made a global, science-based commitment to reach Net Zero greenhouse gas emissions by 2030. That commitment includes supporting clients to reduce their emissions, reducing emissions from PwC’s operations and suppliers and investing in carbon removal projects.

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