Published: May 27, 2010
Industry needs to show private sector there's money to be made in climate change, says bank.
Private sector funding is available for the green economy, but not enough of it is being secured by the industry, says Deutsche Bank’s head of environmental financial products.
Martin Lawless, speaking at this year’s Carbon Expo in Cologne, claims that the total assets of the global fund management industry, both conventional and alternative, are US$90tn. To get more of that the industry needs to demonstrate it can produce low risk, positive returns, he said.
He added that the current debate is too concerned with the sourcing of finance. Instead, he said, people need to be focused on how to increase returns while reducing risk.
“Once that is established the finance will follow of its own accord,” he says.
Mohsen Khalil, the IFC’s global climate head, adds that industry also needs to create a market-driven sustainable proposition and that will only be achieved through building scale business models. “If you have the right proposition then the financing will come.”
Lawless did admit that the current economic turmoil had made investors even more risk averse but to secure private money the public sector needs to show “TLC” – transparency, longevity and consistency.
“So private sector finance is readily available, provided that the returns are high and the risks are low. The public sector needs to create mechanisms that provide transparency, longevity and consistency,” he said.
He explains that these mechanisms include tax breaks and grants, which have attracted private sector funding in domestic markets.