How the Financial Sector Is Addressing Climate Change—And Why It Matters

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The organizations that lend, invest and regulate the world’s money are taking on climate change. There was a flurry of announcements at the COP26 U.N. climate conference in Glasgow on Tuesday, where former central banker Mark Carney worked to reach global agreements with the financial sector to use their sway to reduce emissions. Here are some of the key points and what they mean.

Why does the financial sector matter for climate change?

The world’s banks and investors can deliver the financing needed to get the world on the pathway to reducing carbon emissions. They could provide cheap and plentiful financing for green energy producers and make it more costly for fossil-fuel producers to raise cash. Investors have been at the forefront of pushing change in corporate thinking. Banks are catching up, pledging to align their financing portfolios and lending power to persuade clients to get aboard too.