green finance

By Jasper Judd, Co-Founder, Global Returns Project

When it comes to climate action, the pandemic has opened our eyes to the scale and speed of change that is possible. We know now that we can change the way we do things—and change quickly. And while governments and policy makers have been slow to respond to the Climate Crisis, their massive fiscal response to COVID shows that we can take similarly decisive action to save the planet.

The financial services sector is an integral part of this journey. And there are signs that our public and private institutions are beginning to understand this reality. Rishi Sunak, for example, recently announced plans to make the UK a world leader in green finance and financial technology, by launching green gilts — or “green sovereign bonds” —to fund low-carbon infrastructure projects. 

Interest in ESG investing, meanwhile, has risen in popularity in recent years. But while there’s no doubt that committing to sustainable investing is important as we move forward, we need to re-think the role that capital plays in tackling the Climate Crisis. We must apply our finances to climate action beyond the scope of ESG investing.

Private companies can only tackle a selection of the problems presented by climate change. In reality, solving the Climate Crisis requires action in multiple areas, and many problems have no market solutions. There is no market mechanism in place for suing polluters, or for protecting the rainforests and other habitats, for instance. That’s a role filled by not-for-profit organisations.

Supporting not-for-profit climate solutions yields returns like any other investment. The returns are shared and global, but they are real and identifiable. Funding a healthy future for our children is money well spent. 

And financial institutions can also play a key role in the effort to fund these not-for-profits.

Financial institutions already have raised significant concerns about climate change, with many senior figures openly calling for their peers to take more action and leverage their power for the good of the planet. Now there is an opportunity for them to take even more decisive action.

At the Global Returns Project, we’re ready to work with financial institutions how to support not-for-profit climate solutions at incredible scale.

We want to empower individuals to “Reinvest in Earth”. That is, to commit just 0.25% of their savings and investments annually to the most effective not-for-profit climate initiatives.

By Reinvesting in Earth, just 3% of people with savings could raise a staggering $10B every year for those vital not-for-profits. And that kind of transformational fundraising is possible through the support of financial institutions. If the financial services sector made Reinvesting in Earth normal and easy for all their clients, they could raise incredible sums for the climate. By offering Reinvesting in Earth as a tick-the-box option to clients, these institutions will change the way we fund climate solutions.

Behavioural science tells us that if we normalise Reinvesting in Earth, more of us will choose to participate. So, in giving their clients the ability easily to commit 0.25% of their savings and investments annually, financial institutions will enable a huge boost for funding climate initiatives.

More and more, the realities of extreme weather, flooding and natural disasters – along with the warnings of high-profile public figures like David Attenborough and the Prince of Wales – underline the need for immediate climate action. And research shows that donating to climate charities is the most effective personal action someone can take to help tackle the Climate Crisis.  

Reinvesting in Earth allows individuals to make a meaningful difference in combatting the climate emergency. And with financial institutions on board, we can increase that critical climate funding exponentially. Ultimately, we need to save for a future that is worth saving for. We must fund not-for-profit climate solutions alongside sustainable investing and ensure that our finances are supporting their efforts.