Sustainability – the year ahead

January 25, 2021 | Nicole Anderson

So here we are – already in the last week of the first month of 2021. It feels like we have charged into the new year desperate to shake off the unprecedented events of last 2020.

Thankfully, the 20th January US Presidential inauguration came and went without the doomsday forecast of a violent disruption many had feared in the run up to the confirmation of President Joe Biden.  

But most of us know that the ride has just begun – and stability is likely to be on the backburner for some time.

Biden’s swift action in the reinstatement of the US to the Paris Climate Agreement for the most part was received very positively by international communities. This together with a $2trn (£1.5trn) package to accelerate investment in sustainable infrastructure and clean energy in the US has set some analysts out in forecasting growth of 6.5 percent for the US economy in 2021 – the world’s second largest polluter.

However, combined with the political tensions and the thin margin won by the Democrats, many observers will fear a rocky road ahead. The onward investments and difficult decisions that are needed such as the blocking of the Keystone XL pipeline, bringing huge quantities of oil from Canada to the US to be refined, could make action against climate change a battle of wills with Republicans who are likely to argue the cost of transition.

Biden’s task to stabilise money and capital markets makes for in 2021 a real task not for the faint hearted. Here’s hoping his administration takes on the bold steps for the mid and long term. Read more about his ambitious plans.

And while the world’s eyes were set on the US, the plight of the world continues in its adaptation to climate change. The latest UNEP Adaptation Gap Report 2020 finds that while nations have advanced in planning, huge gaps remain in finance for developing countries and bringing adaptation projects to the stage where they bring real protection against climate impacts such as droughts, floods and sea-level rise.

While the report highlights that 72 percent of countries have adopted at least one national-level adaptation planning instrument, the finance needed to implement these plans is not growing fast enough.

Annual adaptation costs in developing countries are estimated at $70 billion. This figure is expected to reach $140-300 billion in 2030 and $280-500 billion in 2050. 

The report continues to highlight a growing theme we at Redsand Ventures have been committed to unpacking and that is the true commitment for financial actors to rally around the biodiversity challenge and opportunity.

Finance needs to invest in nature-based solutions as low-cost options that reduce climate risks, restore and protect biodiversity and bring benefits for communities and economies. I personally look forward to seeing a broader interest in the work found in the Dasgupta Review commissioned by the UK Treasury which aims to explore The Economics of BioDiversity. The sooner the finance community rallies around ecosystems of value, the faster we can speed up adaption programs, investments and of course fund the innovation so desperately needed.

On the topic of innovation – which will be a constant theme on our RS Voice blog – I picked up an article highlighting the real concerns of innovation capital being eroded – one of the many untended consequence of the pandemic. The innovation community focused on sustainability, and especially the role London should be playing as a fintech icon, has been dramatically impacted by the very real economic consequences of economic retraction and the capital’s lockdown. It is still not evident how the venture capital community will rally in order to preserve capital inflows into the city.

The city, like most, runs on networks. Now more than ever those networks should be collaborating and extending their service to portfolio companies and ventures raising funding. And the key, I believe is public private partnerships – a theme that is growing across most sustainability focused innovation as it pertains to investment.

This is the time to invest. The pandemic will pass but the innovation in finance and transitional core industries represents a huge investment opportunity. Lets do what we can to make London shine in its action vs rhetoric.

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