Transitioning towards a sustainable agricultural system is crucial to address biodiversity loss and nature-related risks on the path to a net-zero economy. This shift will be quite challenging—perhaps even more so than the clean energy transition—given that over 330 million people across 78 countries are currently facing an acute level of food insecurity.

Nature and biodiversity are emerging as critical areas of market focus, attracting increasing attention from corporates, financial institutions, and policymakers.

Early 2024 saw a sharp surge in ESG fund flows, driven by a rally in tech shares (which are heavily weighted in ESG indices given their high ESG scores). In February, inflows to ESG fixed income funds reached their highest in over a year. Looking ahead, a synchronized series of rate cuts by major central banks could have a positive impact on ESG fund flows, particularly in the second half of 2024.

Beyond carbon emissions, addressing methane emissions is vital for achieving a net-zero economy by 2050. Despite increasing pledges to reduce methane emissions, these efforts have been limited in scope due to the wide range of emission sources (making standardized solutions difficult) and the high cost of financing emissions reductions.

Our New York Climate Week events last week—which included an IIF Transition Finance Workshop, an IIF/TCW Blended Finance Roundtable, and the launch of the IIF Global Debt Monitor—focused on the changing landscape for net-zero transition planning and addressing the challenges of mobilizing capital for climate action.

Global clean energy investment continues to outpace spending on fossil fuels, largely driven by China and mature markets. While the subdued global economic outlook is weighing on commodity prices—including energy transition metals and minerals the growing push to shift to solar and wind energy should boost demand for aluminum, copper, and rare-earth minerals on the path to net-zero economy.

While worldwide efforts are being made to shift to renewables and alternative fuels, fossil fuels are still projected to be a major source of energy by the end of the century, accounting for nearly 25% of global supply; Given this continued reliance on fossil fuels, carbon capture and storage (CCS) technologies have a vital role to play in addressing climate change—but are currently projected to fall short of their potential on the path to net-zero.

The strong momentum in climate pledges and climate investment flows in recent years is encouraging… but many publicly listed firms still have business practices that are not aligned with keeping global warming < 2°C.

High and rising global debt levels have created a slow-burning crisis, with countries increasingly vulnerable to future shocks after the unprecedented surge in government debt resulting from the Covid-19 pandemic.

Early and up-front capital spending is crucial for managing the long-term costs of the energy transition; Achieving net zero emissions will require extensive investments in new and innovative technologies, with nearly half of emission reductions expected to come from technologies currently under development.