![Image description: Pictures of clumps of leaves and ferns, cascading coins, and a graphic of a person sitting atop a pile of money over a green globe, against an iridescent background. End ID.](https://cdn.thegazelle.org/gazelle/2023/09_24_2023/Shahd nigim-green finance.jpg)
As the world turns its eyes towards us in anticipation of the COP28 climate change conference in Dubai, the importance of global action against climate change has never been clearer. While the UAE’s host position as a country that built its riches on fossil fuels has attracted considerable international scrutiny
, great opportunities exist to prove that even fossil fuel exporters can lead the way in the renewable energy transition. The UAE's vast solar potential and its recent investments in green technologies
underscore this potential.
Too often, the environment and the economy are painted in diametric opposition. “Environmental and social governance” and “impact investing” are considered enemies of profit by many investors. But the climate crisis is already the number one enemy of profit, and life as we know it — pollution’s environmental impact
will reach $3.3 trillion USD by 2060. Pursuing profit as its own end will end up destroying the global standard of living, and even profit itself in the process. Perhaps there is no ethical or sustainable consumption under capitalism, and the situation is far too urgent for the market to resolve. But, there is no denying that unilateral government action is unpalatable in nearly all political climates. When even walkable 15-minute cities
are framed as a mechanism for totalitarian control, what hope is there for something as comprehensive as a “Green New Deal”?
Every COP raises criticism of “greenwashing”, regardless of where it is held. Diplomats from all over the globe fly to a faraway place and congregate to allow corporations to flaunt their green credentials. It's a delicate balance to strike even with full faith, between showcasing real efforts and presenting what is palatable for public relations. Misinformation can very easily generate investor confidence without the hard, costly work of research and development. Net Zero pledges and climate accords, even the Paris Agreement which will face a stocktake this year
, have so far amounted to vague promises with no international enforcement mechanisms
. Yet, any time a global climate agreement is signed, it is heralded as the beginning of a new age of progress.
There are a growing number of assets related to the green energy transition and decarbonization, but these assets are held up in private equity funds and not as easily accessible to the common investor. There are many largely untapped assets, however, that should be the bedrock of any sustainable investor’s portfolio.
Green commodities are not only food, water, and energy, but also the critical minerals that will be instrumental to the buildout of clean technology
. Mineral extraction creates its own secondary social and environmental concerns, which must be addressed to scale up electric vehicles, wind turbines, and a host of other technologies.
Real estate and infrastructure also present significant opportunities. Climate migration will drive people to particular regions
, where asset values will rise substantially. Investments in these regions will further broader societal benefits as jobs are created in new industries and the physical realm is built out to accommodate these populations.
The average individual investor needs to be able to access these assets without having to open a brokerage account. To that end, fintech platforms and digital solutions can bridge the gap, democratizing access to green investments and ensuring that the green transition benefits all, not just the elite. Simplified investment tools, accessible information, and transparent benchmarks can empower even those with limited financial knowledge to make informed choices about where they place their money. Incentives can be provided to startups and companies that make green investments more accessible to the general populace.
To unlock the power of climate capital, there needs to be trust, transparency, and clear pathways for investments. This presents a unique challenge but also an immense opportunity: how can we devise mechanisms to channel these vast reserves for the broader good, ensuring that sustainable investments aren't just the domain of elite investors, but accessible to all? The challenges of greenwashing and rent seeking loom large, but on the other hand, in the UAE and worldwide, there is a great innovative ecosystem developing. Democratizing access to green finance is one of the most important steps towards ensuring that “green transition” is not just a buzzword that the wealthy jetset to discuss, but a tangible reality benefitting every corner of the world.
Ethan Fulton is Editor-in-Chief. Email them at email@example.com.