“We consistently hear from financial leaders that trillions of dollars are allocated to transform economies and cities to achieve net zero. However, many have observed that, despite the large figures, the actual flow of capital appears minimal,” stated Simon Perham, head of investor outreach Europe at Carbon Tracker. He moderated the first panel of the day at Sustainable Finance Live 2023.
Perham was joined by a distinguished panel including Kaj Embren, Senior Advisor at Kaj Embren Ltd; Sophie Kempthorne, Innovation Lead at Innovate UK KTN; Vera Kukic, UK Lead for Sustainability in the Financial Services Sector at IBM; and Amandine Tetot, Head of Project Finance at Triodos Bank.
Perham opened the discussion by inquiring about the view that some significant barriers to investing in clean, affordable energy are not technological or financial, but human. Kempthorne responded, “We mainly engage with local authorities. The capacity and skills to develop the pipeline of projects necessary for decarbonizing local economies represent one of the biggest obstacles; it’s not a matter of technology. Local and city authorities are well-positioned to lead this effort, as they manage governance and planning and have connections across public and private sectors. However, they often lack the capacity to execute these initiatives.”
Kukic built on this point, stating, “Technology is available, but we need supportive upstream and downstream infrastructure for clean energy to function effectively.” Embren reiterated the importance of the political sector, emphasizing that “this is fundamentally a human issue. It revolves around leadership and the interplay of bottom-up and top-down approaches.”
From a grassroots perspective, Tetot highlighted the significant impact of small community projects. “We’ve seen numerous small projects funded over the past 10 to 15 years—initially just volunteers and ideas—that have evolved into substantial organizations,” she noted.
Discussing the costs associated with green energy, Kempthorne argued, “By balancing local energy demand and supply more intelligently through digital optimization and local market structures, we can generate significant savings. Effective management of demand and supply at the local level can drastically reduce costs.”
She illustrated this with the “Greater Manchester local energy market project,” where an initial investment of £3 million in grant funding is projected to save £40 million annually in avoided grid reinforcement costs within five years.
Kempthorne also stressed the crucial role that citizens play in enabling necessary changes in cities and towns. “Their consent drives the demand for products and services, which in turn fuels adoption and deployment. Therefore, ESG (Environmental, Social, and Governance) is not merely a supplementary aspect; it is a critical component grounded in the realities of everyday life that influences return on investment.”
On the subject of ESG data, Kukic noted, “We must acknowledge that new standards will emerge, resulting in greater availability and granularity of data, as well as more scientific calculation methodologies. Transparency is essential, and we need to move away from obscuring data.”
Tetot underlined the importance of financial institutions’ roles in collaborating with existing customers. “It’s crucial to support those customers or counterparts you already work with. Whether the focus is on climate mitigation or adaptation, it’s about challenging current customers and partners on these matters.”