Panel
Investing in Climate Action
Milken InstituteSpyros Kouvelis, Julia Bucknall, Saadia Madsbjerg, Vijay Manthripragada, Nelson Switzer, Gary White
- Global challenges anticipated to include water shortages, health issues, food production constraints, food availability issues, and employment disruptions, with the UN projecting a population of around 9 billion by 2050 requiring a 60% increase in food production.
- Current water waste is calculated at 25% of available fresh water due to 80% usage for food production and one-third food waste, with the number of people facing water scarcity currently at 2.1 billion expected to grow over the next few years.
- Financing gaps identified include $100 billion annually needed between now and 2030 for SDG 6, $12.7 trillion between now and 2030 for Paris Agreement goals, and a World Bank target of 28% of total investment having climate co-benefits by 2020 (currently 26%) with an annual allocation of approximately $15 billion for adaptation and mitigation.
- Investment mechanisms expected to shift toward capital markets rather than multilateral development banks, utilizing structures such as "pay-for-performance components" for municipal green infrastructure and a new $50 million fund targeting 4.6 million people with water access at a 3.5% return rate.
- Moody's may assign negative credit ratings or pressure municipalities failing to integrate climate strategies, while investors are expected to increase engagement with climate risk products as data integration improves.
- Regulatory expectations range from a predicted improvement and simplification in the U.S. landscape to the risk that inconsistent or contradictory policies stifle innovation and operation.
- Business growth forecasts include a company doubling every two years and the expectation that private sector participants must immediately respond to policy changes to manage risk and reward.
- Specific investment plans include the "Internet of Water" focusing on data analytics for water quality and quantity, developing AI and data analytics for decision-making, and expanding capital market access in the very near future.
- Long-term investment trends anticipate that after a 10-year period of public investment in landscape protection, local private investment will flourish, though solutions must operate at the scale of current capital market mechanisms rather than remaining pilots.
- Economic risks include increasing costs from climate-related events like wildfires and more unpredictable droughts and floods necessitating expanded investment sources.
- Progress on sustainable development goals is expected to accelerate only if climate change is linked to the 17 goals, otherwise binding business development and investment to climate change is required to move from principle-based discussion to action.