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Infrastructure vs. Net Zero

The uphill climb to net zero is a global effort which has been highlighted within the investment management industry. There has (unsurprisingly) been a particular spotlight surrounding the future of Infrastructure investments and how the sector must right the wrongs of past environmentally detrimental investments, as well as continuing the expansion and innovation of new investments. 

There is continuing competition for sustainable infrastructure investments across all sub-sectors, with plenty of capital to deploy for this effort. Lack of capital is not the hindering factor in the industry's efforts to achieve net-zero. Rather, investments which have later shown to have unforeseen, negative effects on the environment require further attention for this transition.  For example, "in May 2021, when the IEA revealed its recommendations for the energy sector to reach net zero by 2050, some investors and policy makers were surprised to learn that no more gas projects should be developed. Gas, previously embraced for being greener than coal, turned out to be "not green enough" and likely to be problematic in the near future".

With the target of net-zero by 2050 rapidly approaching, it is still up for debate whether infrastructure investments are at the forefront of the transition or if they are holding this back.

Infrastructure undoubtedly has the power to support the transition to net zero — the fields of energy and transportation provide clear examples of how this is possible. But the pathway to net zero for infrastructure must be pursued with greater urgency and on a global basis if emissions targets are to be met. We need to “build neutral now”.

Tags

transport & infrastructure, net zero, sustainable investing, private markets

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