The Global Sustainable Investment Alliance’s Transforming Global Finance for Climate Action: Addressing Misaligned Incentives and Unlocking Opportunities report assesses the flow of capital to the projects needed to address climate change.

Released at COP 29, which has been heralded as the ‘finance COP’ the report identifies systemic misalignment keeping private investment and policy making out of step.

“Investor and policymakers’ incentives are misaligned,” said James Alexander, CEO of UKSIF. “At COP 29, policymakers, investors and civil society negotiators can help address the key barriers to meaningful and actionable change. We need supportive policy action to align incentives and catalyse capital to unlock the opportunities that a climate transition presents.”

The report finds five categories of barrier, starting with a policy vacuum, where policies can act as barriers or there is a lack of positive policies to encourage climate-positive investments.

The other four areas are: short term thinking, or as the report calls it ‘interest’, a failure in valuation where financial models fail to see hidden costs, a lack of ownership as investments are managed without active involvement, and misalignment where business models and industries conflict with the goals of the energy transition.

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