Climate action amid regulatory and financial constraints

Rethinking #ClimatePolicy: The Power of Tailored Approaches 🌍🏭🧩 Climate policy effectiveness isn't a simple yes or no question. The real challenge lies in understanding which policies work under specific conditions. 🔍 A recent study in Science offers crucial insights into this complex issue, analysing approximately 1,500 climate policies across 41 countries from 1998 to 2022. The research, led by Annika Stechemesser and colleagues, identified 63 successful policy interventions that significantly reduced emissions. Their findings reveal that tailored policy mixes often outperform single-instrument approaches. In the transport sector of developed economies, combining pricing with subsidies was highly effective, while in developing economies, regulation was most powerful, both alone and in combination with other policies. 🚗💨 In the electricity sector of developed economies, pricing was key in 50% of effective interventions, while in developing economies, standalone subsidies were most effective. These findings underscore the importance of context-specific policy design in driving meaningful emission reductions. 🏙️🏭 The study's nuanced approach provides a solid foundation for more effective climate action. However, I believe its implications extend beyond environmental outcomes to the realm of political feasibility. 🏛️🤝 In my view, these tailored policy mixes may offer a promising path through the political gridlock that often impedes climate action. By incorporating diverse policy instruments - from market-based mechanisms to regulations and incentives - these mixes provide multiple points for negotiation between differing ideological positions. 🔧🎯 Consider how this approach might bridge the gap between left and right. Conservatives might favour pricing mechanisms for their market-based approach, while progressives could support strong regulatory measures. A well-designed mix that includes both could potentially satisfy both camps, leading to a more politically viable solution. 🌈🤝 Furthermore, the sector-specific nature of effective policy mixes aligns well with the diverse interests represented in most political systems. Policies tailored to the buildings sector might appeal to urban representatives, while measures targeting industry could gain support from legislators in manufacturing-heavy districts. This granularity allows for more precise addressing of constituent concerns, potentially reducing overall opposition and fostering compromise. 🏙️🏭🤔 In a world grappling with polarization, could this approach offer a pragmatic way forward on climate action? By providing a framework for compromise without sacrificing effectiveness, tailored policy mixes might be key to unlocking sustained, impactful climate policy. 🔑🌱 What's your perspective on this? How might we leverage these insights to overcome political barriers to climate action? Link to study: https://lnkd.in/ehH8tHxf

Even the world’s largest, most sophisticated investors—those that understand financial climate risk deeply—are structurally constrained from financing the transformations needed to reduce that risk at its source. Simon Mundy's recent Financial Times article on Norway’s $1.8 trillion sovereign wealth fund (Norges Bank Investment Management) is a powerful illustration. NBIM’s own modeling suggests that climate change could wipe out 19% of the value of its U.S. equity holdings. Yet its mandate—to maximize returns with reasonable risk—limits its ability to “more aggressively support climate change mitigation.” This isn’t a critique of NBIM. It’s a reminder that asset owners, no matter how committed or informed, cannot - on their own - deliver the systemic transformations that meaningful climate action requires. There is a better approach: coordinated, multi-actor strategies that are both more effective and entirely doable. Systemic transformations—redesigning energy systems, electrifying transport, decarbonizing industry—require multi-actor coordination, institutional arrangements, and financing tools that go far beyond conventional portfolio strategies. Moreover, two-thirds of future emissions are projected to come from emerging and developing economies. But most institutional capital is not flowing there, constrained by high perceived risk and low credit ratings. Mitigating climate risk requires unlocking affordable finance in EMDEs. Financial institutions can and should be core partners in confronting planetary and financial climate risk. But today’s dominant approaches—corporate target-setting, exclusions, portfolio realignment, etc.—are not enough. The more effective strategy for large asset owners who understand climate risk is to work with governments, MDBs, utilities, and real-economy actors to co-design and co-finance system-wide transition pathways. Another basic reminder is that finance follows markets, not the other way around. When coordinated transition strategies reduce fossil fuel demand, improve the risk-adjusted returns of low-carbon alternatives, and de-risk investments through mechanisms like long-term offtake agreements or expanded credit enhancements, capital will follow. Pressure on financial institutions alone will yield, at best, inherently modest and limited results. Some argue that in the absence of stronger political leadership, incremental steps by financial institutions are better than nothing. But in many parts of the world, the real bottleneck isn’t political will—it’s the structural constraints of the financial system and the lack of coordinated engagement among economic actors. In developed economies, much can be done through subnational governments, public utilities, regulators, and public procurement, even without federal action. What’s missing is not intent but practical, multi-actor coordination—and that is entirely within reach. https://lnkd.in/eueSRXqt

For decades, climate action has often been framed as a choice: Mitigation to cut greenhouse gas emissions. Adaptation to help communities withstand worsening floods, storms, droughts, and fires. 💰 Yet, finance for adaptation has lagged far behind. Mitigation attracts most of the investment, while adaptation remains underfunded, leaving communities increasingly exposed to climate risks. But here’s the truth: this divide is misleading. Many solutions already exist that deliver both mitigation and adaptation benefits simultaneously. 🔎 A recent analysis of 300 adaptation investments found that over half also reduced emissions , often with economic value equal to or greater than their resilience benefits. 🌱 Whether it’s silvopasture that sequesters carbon while protecting farmers’ incomes, or mangroves that absorb CO₂ while shielding coastal communities, these are not “either/or” solutions. They are “both/and” — and they are urgently needed. 🚨 With global temperatures dangerously close to thresholds that will unleash even more severe impacts, prioritizing multitasking climate solutions is essential. They make limited finance go further, deliver co-benefits across sectors, and most importantly, improve lives while safeguarding the planet. 👉 Climate action must be designed to serve both goals at once. read the article by World Resources Institute 👇 https://lnkd.in/eMAvraRv

The numbers tell a stark story: #ClimateFinance needs to grow 𝐬𝐞𝐯𝐞𝐧𝐟𝐨𝐥𝐝 by 2030 to meet the $4.35 trillion annual funding required to limit global warming and adapt to its effects. Current spending? A mere $632 billion annually. Governments and charities alone cannot fill this gap. The private sector, managing over $210 trillion in assets, 𝐦𝐮𝐬𝐭 play a bigger role. Yet barriers such as the "tragedy of the commons" and "tragedy of horizons" keep private capital from flowing into climate solutions at scale. Innovative approaches like carbon markets, public-private partnerships, and financial instruments that de-risk investments can help overcome these challenges. Encouraging private sector participation is especially crucial for adaptation projects in vulnerable regions, where funding needs far exceed current contributions. The path is clear, to make climate investments not just necessary, but profitable we need: ✅ 𝐏𝐨𝐥𝐢𝐜𝐢𝐞𝐬: Supportive regulations that mandate emissions reductions and incentivize sustainable practices. ✅ 𝐈𝐧𝐜𝐞𝐧𝐭𝐢𝐯𝐞𝐬: Tax breaks, subsidies, and grants to encourage private investment in climate solutions. ✅ 𝐍𝐞𝐰 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐭𝐨𝐨𝐥𝐬: Instruments like green and blue bonds, blended finance, and carbon markets to de-risk and attract capital. 🌍 Help amplify sustainable solutions for the planet and share this post with your network! ---- 𝐹𝑜𝑙𝑙𝑜𝑤 𝑚𝑒 𝑓𝑜𝑟 𝑚𝑜𝑟𝑒 𝑖𝑛𝑠𝑖𝑔ℎ𝑡𝑠 𝑜𝑛 𝑡ℎ𝑒 𝐵𝑙𝑢𝑒 𝐸𝑐𝑜𝑛𝑜𝑚𝑦 #BlueEconomy, #ImpactInvesting, #SustainableFinance, #InvestingForGood, #FinancialInnovation, #ClimateFinance, #OceanEconomy, #Sustainability, #RiskManagement, #FutureOfFinance