Ensuring a sustainable future in the Caribbean requires more than moneyTuesday, December 07, 2021
Working to promote a sustainable and prosperous future is a frequent topic of discussion in both the Caribbean and global banking and finance sectors. Conversations have historically focused on financial concerns but have since shifted to how the financial services sector can positively impact the world's most pressing environmental and social issues.
How do the companies I trust support renewable energy projects? Is this company investing in women-led firms? These are just a few of the questions that customers globally are asking.
Sustainable financial products utilise environmental, social, and governance (ESG) criteria to invest in clients' and society's long-term improvement and promote sustainable and ethical practices. They require financial institutions to produce value for the planet and its inhabitants, rather than simply focusing on maximising profit.
Businesses, especially those in the financial sector, must lead the sustainable finance charge, as these efforts depend on fostering transparency and building trust while also supporting communities in which they operate.
A Global Sustainable Investment Report found that, as of 2020, US$35.3 trillion, or 36 per cent of all assets under management in the world's five largest markets (United States, Canada, Japan, Europe, and Australia) were comprised of sustainable investments. This is a significant increase from just two years ago when sustainable assets under management totalled US$30.7 trillion. This trend is expected to accelerate as individual and institutional demand increases over the coming years. Not only is sustainable investing the right thing to do, consumers and market forces are increasingly demanding financial institutions offer more sustainable products and services.
The challenges humanity are facing are as varied as they are complex. The 2015 Paris Climate Agreement was hailed for committing countries around the world to reducing carbon emissions by 55 gigatons by 2030. However, at this rate, the world would still emit its entire carbon budget that could keep global temperature below 1.5 degrees Celsius by the 2030 agreement deadline.
No single institution can solve global problems which have a very real effect on us all. When communities are devastated by the novel coronavirus pandemic or natural resources disappear in regions like the Caribbean that are vulnerable to climate change and increasingly powerful hurricanes, all sectors should explore their shared responsibility and, most importantly, collaborate to address these challenges.
Financial services institutions should approach this issue by financing climate solutions, reducing investments in projects that aggravate climate change, and encouraging clients to join their efforts to amplify their collective impact.
As a leader in the Caribbean financial services sector, Citi joined the United Nations Net Zero Banking Alliance and committed US$1 trillion to sustainable finance by 2030. This included an environmental financing target of US$250 billion that will grow to US$500 billion by 2030. This total amount will also support education, affordable housing, health care, financial inclusion, community finance, international development finance, racial and ethnic diversity, and gender equality.
Beyond advocacy, financial institutions should also act as agents of change by enacting initiatives that allow them to positively influence communities by tapping into their own expertise and insights. For example, the Citi Foundation and Trust for the Americas launched the Democratizing Innovation with the Americas Urban Labs for Youth Innovation Project to empower young people to solve challenges in their communities. In response to the pandemic, over 100 Jamaican young people participated in this virtual competition to develop prototypes and pitch ideas that addressed economic relief, education, access to information, health, and security.
We are living through a historic turning point in the Caribbean and around the world and I believe that, when working together, we have the potential to have a real and positive impact.
Our common goal is to secure a sustainable and prosperous future, not only for ourselves and our families, but for the entire global community. How each of us use our financial potential is one of the keys to securing that future.
Eva Lewis is Citi country officer and corporate bank head of Citi Jamaica.