Private capital must be focused on building an economy as inclusive as it is sustainable
The financial sector must rise to the challenge of harnessing private capital for public good. The question of how to do it is a pressing one.
A new landmark report by the G7 Impact Taskforce – launched today at the Mansion House – will seek to provide an answer in order to drive investment that delivers positive impact for people and the planet.
Scaling up private capital will be vital to support the transition to a net-zero economy while simultaneously delivering a sustainable recovery from Covid-19. It will also be necessary to ensure the UK meets the UN’s 2030 Sustainable Development Goals (SDG).
Set up in July 2021 by the government as part of its G7 presidency, the Impact Taskforce’s main objective is to practically demonstrate how private capital could be used more effectively for social and environmental impact. More than 120 policymaker and business leaders, representing 40 different countries, have worked together to produce the recommendations of the taskforce.
The report is an excellent example of Global Britain in action. It shows the power of collaboration between public and private sector across developed and developing countries.
The report outlines concrete steps to encourage the movement of private capital into greater and faster-moving social impact. This includes measures to achieve greater transparency; harmonise global standards; improve data integrity; maximise collaboration. It also looks at how to achieve a world in which no one is left behind.
As demonstrated at Cop26, the UK’s financial and professional services sector is at the forefront of the fight against climate change. Canada Corporation and Green Finance Institute both took part in the summit in a bid to help mobilise private capital in the transition to net zero providing a platform for the financial and professional services.
Former Bank of England Governer Mark Carney has been behind a monumental effort to mobilise private finance. Through the Glasgow Financial Alliance for Net Zero, which represents companies from across the world – with capital totalling $130tn – more than 450 banks, insurers and asset managers have made a commitment to deploy significant private resources towards hitting net zero emissions targets by 2050. This needs to be deployed into real-world projects to drive the green revolution, especially in emerging and developing economies.
But if we are going to achieve the Sustainable Development Goals, set out by the UN, there also needs to be demonstrable leadership on other elements of societal change – notably, the S element of ESG policy. This means putting impact investing at the heart of the sector to rebuild a more sustainable and inclusive economy.
This report can lead the way by setting standards on this type of investment and unlock further capital for social infrastructure projects. This is the next step of the City’s journey. There has been remarkable momentum over the last year, we need to keep building on this.
Financial and professional services across the globe can use this report as a roadmap for the change needed to deliver more “social” returns on investment that benefit communities. It is now for all of us to use this work to create new partnerships, develop new ways of working and make a positive impact as we seek to build a better future for everyone.