Harnessing Finance for Sustainability: Insights from the Deloitte & Liechtenstein Bankers Association Panel
On Tuesday, September 3rd, I contributed to the vibrant discussion at the Deloitte and Liechtenstein Bankers Association panel, "United to Create an Impact: Transforming Finance for a Sustainable Future." This distinguished event gathered leaders from private, philanthropic, and public finance sectors, including H.S.H Prince Max von und zu Liechtenstein, Achim Steiner, Ute Klamert, Christian Frutiger, Reto Ringger, Fabio Segura, and Julius (J.N) Hill, to address the crucial intersection of sustainability and finance.
The discussion focused on overcoming the barriers impeding capital flows to sustainable investments, particularly in advancing global Sustainable Development Goals (SDGs). Drawing upon my experience in climate finance, I highlighted the significant strides the finance industry has made. Today, global capital aligned with the net-zero transition by 2050 exceeds $70 trillion (estimates vary significantly) – an impressive sevenfold increase since the 2015 Paris Agreement. In 2023, nearly $2 trillion was invested in low-carbon solutions, marking a sixfold increase from the $350 billion invested in 2015. However, global demand for carbon-intensive energy continues to rise, with fossil fuels still supplying 82% of primary energy worldwide.
The reason for this contradiction is twofold: time and geography. While regions like the US and Europe are decarbonizing and have passed their emissions peaks, large regions of the Global South are still carbonizing and looking at strong economic and population growth. Christian Frutiger, Ambassador and Head of Thematic Cooperation at the Swiss Agency for Development and Cooperation, made the point that “in 20 years from now, 1 in 4 of us will be African.” This reality highlights the necessity for a nuanced approach to decarbonization, or “green growth,” especially in the Global South, where countries in Africa, Asia, and South America have yet to reach peak carbon emissions. Secondly, we need to consider the time lag between net-zero-aligned investing and net-zero impact. Many of the technologies supported by these investments will lead to decarbonization over time.
Despite the evident progress we have made to date, the panel discussed the issues of barriers to investment in sustainable solutions in the global south. Leveraging my background in wealth management and climate data, I identified three main reasons: the elevated cost of capital, regulatory risk, and the fossil fuel addiction of carbon-intensive economies like those in South Africa and Indonesia. Especially the former two are fueled mainly by ambiguity and perceived risks in developing markets. To make projects in these markets investible, OUR financial services providers must get creative and cultivate deep expertise in select areas and change ambiguous fear into calculated risk. Our wealth advisors must build partnerships with local developers, banks, and NGOs, become experts in a region and specific SDGs, and help the investor with familiar tools like currency hedging, credit risk insurance, and diversification.
Developing such expertise requires continuous investment in talent within organizations, ensuring that financial professionals broaden their understanding of the markets they serve. Advisors must not only grasp the unique characteristics of these developing regions – including the local interplay of finance, industry, politics, and public support – but also be adept at identifying both risks and opportunities. The SGDs are complex but we need scalability and scale can only be achieved through standardization - hence, my conclusion is that with everyone gaining expertise and creating impact in a specific area, we will be more successful collectively than if we all work on the same broad problem on a high level. Fabio Segura made the powerful point that “we need to be in love with the solution and not with the problem.”
The event was not merely an exchange of ideas but a call to action, emboldening each participant to approach environmental challenges with resolve and collaboration. The dialogue encouraged a collective push beyond comfort zones, fostering collaboration over competition to make a lasting, positive imprint on our planet. Fellow speaker, H.S.H Prince Max von und zu Liechtenstein, offered a critical reflection on our societal moral compass resulting in consumerism and individualism, emphasizing that addressing these deep-rooted behaviors is as essential as tackling direct environmental challenges.
The panel concluded with a shared commitment to chart the course toward mobilization of capital toward sustainable solutions, the demystification of risks in the Global South, and the identification of key levers for impact creation.