IMF says $50T investment fund industry can finance green economy

$20T required over next 2 decades for transition to net-zero emissions, IMF says

The International Monetary Fund (IMF) said the $50 trillion investment fund industry can play an important role in financing the transition to green economy.

“The transition to net-zero greenhouse gas emissions requires unprecedented change by companies and governments, as well as additional investment of as much as $20 trillion over the next two decades,” the IMF said in a statement on Monday.

Total assets under management of sustainable investment funds are growing rapidly, more than doubling over the past four years to reach $3.6 trillion in 2020, the statement said.

However, climate-oriented funds accounted for only $130 billion of the total amount,according to the IMF Global Financial Stability Report’s newly released Chapter 3: Investment Funds: Fostering the Transition to a Green Economy.

“Net flows into sustainable funds increased notably in 2020, and climate-themed funds grew especially fast, surging by a staggering 48% of assets under management,” the IMF said.

It urged policymakers to urgently strengthen information regarding the global climate, such as data, disclosures, and sustainable finance, for the sustainable fund sector to become an effective driver of transition to green economy.

The report noted that tools to channel savings towards transition funds can also be used to complement other critical measures to mitigate climate change, such as carbon tax.


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