Climate business expert Vivek Pathak shows us five ways businesses can bring green finance into the mainstream.
Photo: Eliminating the traditional requirement for ties at work, we could easily increase air conditioning temperatures by 2 degrees or more / Ruthson Zimmerman on Unsplash
As climate change grows ever more urgent and relevant, the burgeoning sector of green finance looks set to provide a new pathway towards a more sustainable future.
This past Thursday Vivek Pathak, Director and Global Head for Climate Business at the International Finance Corporation, dropped by the Asia Society Hong Kong Centre to share his insights on how green finance can be brought into the mainstream.
“The moment when we no longer have to talk about scaling-up and mainstreaming green finance is the moment we will know we have succeeded.“
VIVEK PATHAK, DIRECTOR AND GLOBAL HEAD FOR CLIMATE BUSINESS AT IFC
- Get the private sector on your side
Mr Pathak believes that sustainable investments must make business sense.
“This is not philanthropy or CSR,” he says.
He argues that the superficial and small-scale actions encouraged by corporate social responsibility are detrimental to the green finance space. After all, climate risk and resilience are not just charity causes. They pose real costs and economic implications for money-making enterprises.
For sustainability to stick, corporations and financial institutions need to be made aware that green finance is profitable, and that it is within their best interests to invest in sustainable business.
- The importance of cost-effective alternatives
The availability of cost-effective alternatives created by technological innovation are crucial to making sustainable investments financially viable. The example that Mr Pathak cites is that of energy – renewable energy transitions are now ongoing all around the world thanks to the ability of clean energy technologies to achieve relative price parity with fossil fuels.
Mr Pathak suggests that the increasing affordability of solar and wind energy may open the door for more off-grid solutions to energy production. As technology continues to improve and governmental policies gradually change, more and more climate business projects will become profitable and ripe for investment.
- Following the flow of capital
“Green finance is the single most important thing towards building a sustainable society.”
Mr Pathak believes that there is already an abundant level of green activity in the climate business sphere, it’s just that financing institutions are not adequately aware of it. If more and more capital flows into green finance, even the most money-driven institutions will be forced to change. As the share prices and credibility of sustainable businesses rise, investment will naturally flow towards eco-friendly projects.
- Society needs to buy in
“How do you get the average person on the street to start thinking about the climate?”
For meaningful change to occur, Mr Pathak emphasises that society at large needs to buy into sustainability and environmental management. Awareness of climate change and climate risk needs to permeate through all levels of society, not just the private sector – especially when basic practices of recycling and waste management are still not sufficiently widespread.
- Every action counts
Too often people rely on large and faceless institutions to enact change. Mr Pathak says that a truly sustainable society will require all of us to adapt our lifestyles and develop a climate-friendly mindset. Our individual actions may seem minuscule and insignificant, but they are hugely important in building towards collective change.
Mr Pathak leaves us with an interesting example: by eliminating the traditional requirement for ties at work, we could easily increase air conditioning temperatures by 2 degrees or more. While the environmental awareness of businesses and financing institutions is certainly important, Mr Pathak believes that micro-level initiatives such as these will be crucial towards forming the foundation for a green society.
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