Harnessing Private Investor ‘Willingness-to-Pay’ for Climate Change Mitigation
A Mechanism to Co-fund Public Commitments to Achieve the Goals of the Paris Agreement
By Rupert Edwards View PublicationPrivate investors currently have little opportunity to deploy investment capital on concessionary terms for climate impact. This paper proposes that a significant percentage of social responsible investment (SRI), impact, and many mainstream investors would be willing to pay a modest donation on the nominal value of their investment portfolios in order to support climate change mitigation and associated co-benefits, provided that they felt that their overall returns (minus the fee) tracked mainstream investment performance.
In this working paper, we propose a special platform, referred to here as a Global Climate Finance Foundation (GCFF), enabling private investors across the world to contribute a small voluntary payment to climate change mitigation. The resulting climate investments would be underpinned by government climate finance commitments.
An ambitious capital-raising goal for a GCFF could be $10 billion per annum within five years. It would require a total of $5 trillion in investment assets on which investors contribute 0.20 percent in annual fees to raise $10 billion per annum. Such a sum of $5 trillion is a relatively small share of the $161 trillion in total investors’ assets worldwide and $31 trillion in SRI assets.
Harnessing this willingness-to-pay and achieving momentum would require leadership of respected and senior public figures and philanthropic foundations as well as of CEOs at large investment funds.