Our Climate Finance Predictions for 2023
Our founders share their thoughts on what’s in store for ESG regulation, climate finance, and more.
By Elizabeth Landau and Bonnie Gurry
January 12, 2023
As we inch towards 2030 climate targets, we’re approaching 2023 with both urgency and optimism. We hope that significant advances can be made through climate-positive initiatives by governments, corporations, and other institutions. We also hope that this will be a great year for grassroots action and individual contributions to the climate fight. To that end, we’ve curated a list of our top 6 climate finance predictions for 2023: a year that could be pivotal in the fight for our planet.
Here are our 6 predictions for 2023.
1. More emissions regulation, but not enough
Given the SEC’s proposal last year to mandate corporate emissions disclosures, we expect that to be finalized in April of this year. We support more regulation in this area since disclosures are the first step toward better transparency around activities that harm our climate.
However, we predict that regulations of Scope 3 emissions disclosures will fall short. Last year’s SEC climate proposal only mentioned disclosing Scope 3 emissions data “if meaningful”. Our guess is that the subjectivity of this language will make it easy for companies to get away with not disclosing Scope 3 emissions.
Scope 3 disclosures are valuable to investors because they give insight into an organization’s climate risk. Scope 1 and Scope 2 data can fail to capture the full extent of an organization’s climate impact, particularly when it comes to financial institutions like Chase, which neglected to disclose most of its Scope 3 emissions — despite having invested a record $382 billion into fossil fuels from 2016 to 2021. Still, we’re hoping that the advancement of the SEC proposal is a sign of more progress to come.
2. Banks will be peer pressured into furthering their commitments for the energy transition
Previously, we had seen little commitment from big banks to adjust their policies for how they lending to the fossil fuel industry. At best, there’s been a commitment to phase out lending for new coal projects. But even then, sometimes banks revert to their old habits.
We believe that HSBC’s commitment will set a new standard for the industry, and in 2023, peer banks will feel pressured to rise to the challenge and make similar climate commitments.
3. Don’t trust asset managers to put climate first
Asset managers like Vanguard and BlackRock will continue to feel pressure from all sides regarding ESG investing. One side feels the ESG framework hurts the economy and industries reliant on fossil fuel. Meanwhile, the other side believes the ESG framework doesn’t do enough to take environmental and social impact into account (focusing on financial risks instead). We’ll continue to see asset managers waver on making strong net zero commitments. They will continue to play both sides, leading to no significant change in ESG or impact investing.
4. Record-breaking investments in climate solutions
2022 was a banner year for investment in climate solutions, and we expect 2023 to be even stronger. According to Holon HQ, “3,300+ global venture funding rounds delivered $70.1B of climate tech investment in 2022, nearly double 2021's record total.”
We’re even more optimistic because now, large investors aren’t the only ones who can get in on the action. With Raise Green’s climate marketplace, everyone has the opportunity to discover and invest in new climate solutions directly, even if you’re a non-accredited individual who’s never invested before!
Following last year’s record-breaking commitments and the increasing amount of options for everyday investors to get involved with climate action, we’re excited for what’s to come in 2023.
5. Greenwashing of financial products will increase…with offsets being the new way to do it
More supposedly climate positive financial products like credit cards and insurance will launch, but most won’t be as green as they seem. Planting trees, a low-cost way to offset carbon emissions, is becoming the go-to way to convince people a product or service helps the environment. However, this method of carbon offsetting is subject to scams and schemes, plus planting trees is not the most effective form of carbon removal. But, there will be some gems out there that actually fight climate change — and we’ll be sure to let you know when they launch.
6. Time to invest in our planet
To create a better future for our climate, we need to invest in solutions. This is acknowledged by the organizers of Earth Day, who’ve chosen “Invest in Our Planet” to be the theme for Earth Day 2023.
Even though the climate challenge calls for all hands to be on deck, so far, researching and changing your own financial climate impact has been a difficult and time-consuming process.
Here at GreenPortfolio, we’ve been hard at work developing an automated platform to help you see your money’s impact. What is your bank doing with your hard-earned savings? Are you invested in fossil fuels or clean energy and climate solutions? You’ll be able to get the answers in a single glance on your dashboard, and easily decide how to align your money with your values.
The first version of the GreenPortfolio Climate Hub is live! We’re bringing a select number of people from our waitlist onto our platform. Stay tuned for our bigger launch this spring. We’re hoping that many more individuals, whether they’re just starting out with their first bank account or already have a wide variety of investments, will invest in our planet.
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