The pace at which governments are setting climate policy continues to accelerate. In March, the U.S. Securities and Exchange Commission (SEC) announced a proposed rule on the enhancements and standardization of climate-related risk reporting. While this policy action is to be applauded, the science shows a necessity to push harder and with real urgency. The latest report from the Intergovernmental Panel on Climate Change (IPCC), released in April, states that global emissions need to peak by 2025 to limit the worst effects of climate change.
This article is part of JLL’s Global Real Estate Perspective
The question around how to fund the energy transition is a big one. According to the IPCC report, the financial flows needed to fund the energy transition are three to six times lower than levels needed by 2030 to limit warming to 1.5 or 2 degrees Celsius. Importantly, government policy and investment will need to clearly signal support for the energy transition. The growth in United Nations Principle Responsible Investor (UNPRI) signatories – now over 3,800 - is an encouraging sign as it represents US$120 trillion in assets under management.
Looking at the latest policy proposal by the SEC, stating that corporates would need to report on emissions by 2025, in concert with the IPCC report expressing that global emissions need to peak by 2025, can leave the question – is policy pushing far enough?
It truly will be a global effort to achieve GHG targets, all parties pulling together to do their part - whether it be through national funding, national policy and regulation, incentives, sustainability debt vehicles, private equity, corporate or investors - and all investing and pushing for progress to avoid greater costs in the long run. But if government policy fails to meet this moment, it puts a greater burden on individuals, corporates and investors to navigate these trying times.
Global Real Estate Perspective May 2022
This page is part of JLL’s quarterly Global Real Estate Perspective. Follow one of the links below to find out more about global real estate market trends and outlook by sector.