Go big

• “Investors need a large-scale opportunity to engage,” said Martin Nagell, director, mergers and acquisitions, at the UAE’s Masdar. “You can’t do 50 megawatt projects, but if you have a 150 megawatt project, the engagement is worth your time. He urged project developers to “be bold,” and “be visionary,” adding, “Wrap and communicate projects to the world because capital allocators are trying to decide where to deploy capital.”
• Nana Maidugu, head of sustainability and ESG at Nigeria’s Sovereign Investment Authority, emphasized the need for a shift in approach for sovereign wealth funds, saying, “SWF’s can play a unique role as a strategic partner in developing economies. We need to move beyond just financing projects to actively developing them.”

Reduce risk (both real and perceived)

• Decouple project risk from sovereign risk, said Martin Nagell. “If you run a bakery that can sell bread at half the cost of your competitors because you use solar energy, your business shouldn’t be assigned the same risk rating tied to sovereign risk as other bakeries around you”.
• Don’t overlook guarantees, which help to lessen both actual and perceived risk on the part of investors, advised Maidugu. She pointed to InfraCredit a specialized Nigerian credit guarantee company that mobilizes long-term capital from institutional investors in local currency to support green infrastructure projects and other climate-aligned developments.
• Policy engagement may provide a lever, suggested Satoshi Ikeda, chief sustainable finance office at Japan’s Financial Services Agency, who noted that many investors who committed to the climate transition have already pledged to engage policymakers.
• “Local asset managers are key,” noted Hiro Mizuno. “We need to help the local managers develop their businesses so that they can scale up.”

Innovate for impact

• Bring down the barrier of foreign exchange, emphasized Wale Shonibare, director for energy financial solutions, policy and regulations at the African Development Bank (AfDB), who called for innovation in lending for energy systems in countries where, for example, investing in euros but borrowing in nairas can significantly compound the cost of capital, he explained. The AfDB is exploring new approaches to overcoming the imbalance, he noted, including testing the idea of using African units of account as a currency backed by a basket of commodities such as critical minerals.
• Eliminate fossil-fuel subsidies, urged Harry Boyd-Carpenter, managing director for climate strategy at the European Bank for Reconstruction and Development, who noted that fossil-fuel subsidies distort the market. “Most good green things are economically the best thing,” he observed, but these hidden subsidies obscure that reality and slow the flow of climate finance. Anne Simpson agreed, citing a finding by the International Monetary Fund that fossil-fuel subsidies reached a record USD 7 trillion in 2022. “We need to look at how we skew economies and how investors must rely on these sources when they appraise risk,” she noted. “Otherwise we are in a market for lemons, and we want to be in a market for peaches.”

Standards matter

• Establish a global baseline for sustainability disclosure, suggested Simpson highlighting that the sustainability disclosure standard developed by International Sustainability Standards Board (ISSB) could provide a universal foundation for climate impact investing. “The work to be done on standards and the policy work to be done on subsidies must be taken seriously if we are to unlock the opportunities for private finance,” she said. “We need to be able to do two things at the same time.”
• Standards are essential, agreed Mizuno, “so you needn’t question what you’re buying.” Gwen Yu, head of nature and biodiversity at J.P. Morgan, echoed this, noting that “standardization across jurisdictions can help to make projects bankable.” She pointed out that countries vary in their approach to carbon, with some treating it as a commodity, which complicates cross-border investment.
• “Transparency around the social objectives of investment strategies can help to incentivize investments,” noted Theo Keeping of the Grantham Research Institute on climate change and the environment. “We could use more standards around disclosing social outcomes under environmental investment plans.” Arsalan Mahtafar, head of J.P. Morgan’s Development Finance Institution agreed, adding that investors can struggle to find investable projects in developing economies. “Whether it’s energy efficiency or climate adaptation, increase the availability of that information so that capital can seek those opportunities,” he suggested.

Accelerating carbon markets

• “There need to be multiple trigger points for the carbon market to reach scale,” said Mark Kenber, executive director of the Voluntary Carbon Markets Integrity Initiative, including international trading of carbon reductions pursuant to the Paris Agreement and recognition that carbon finance for climate action transcends any one category. “Think of carbon markets as part of a broader scheme,” he added. “We need a stack of different sources of capital.”
• Adopt a learning-by-doing approach. The agreement at COP29 on standards for a U.N.-backed carbon market “introduces an era of learning by doing,” suggested Guy Turner, head of MSCI Carbon Markets, citing the urgency of climate action. “Let’s get this international carbon market up and running. We need countries to commit to climate plans, companies to align their promises with real action, and integrity in the carbon markets—we need to bring every tool we have to the table.”
• National climate plans offer an opportunity to address emissions trading, noted Taleh Musayev, chief operating officer at SOCAR Trading. “More cross-border carbon markets can help to provide capital,” he said.
• Focus on what matters, advised J.P. Morgan’s Yu, who termed herself “cautiously optimistic” about prospects for an international carbon market after the decision to approve development of trading standards. “I like the point in stacking projects because we get bogged down in whether nature-based projects, for example, are better than removals,” she added. “What matters is whether the measurement, reporting and verification are solid. If so, the category shouldn’t matter much.”

Realizing the opportunity

The conversation underscored both the challenges and the opportunities in financing the global climate transition. While developing economies still face significant barriers — from currency risks to a lack of standardized disclosures — leaders across sectors are coming together with practical solutions.

Priorities matter as well. “The macroeconomics of climate action have improved and yet for a bundle of reasons there’s been some pullback in the boardroom,” observed Ali Zaidi, who stressed that momentum is building as more leaders recognize that reducing global emissions is a shared responsibility that transcends borders.

Innovations in financing, greater transparency, and the expanding role of carbon markets all point toward a more inclusive, scalable approach to mobilizing capital where it’s most needed.