Green finance goes mainstream, lining up trillions of dollars behind the global energy transition

Some of the world’s largest corporations and wealthiest investors are lining up trillions of dollars to finance the move away from fossil fuels.

The assets of partly environmentally focused investment funds reached nearly $ 2 trillion globally in the first quarter, more than tripling in three years. Investors invest $ 3 billion a day in these funds. More than $ 5 billion in bonds and loans to fund green initiatives are now issued every day. America’s two biggest banks have pledged $ 4 trillion in climate finance over the next decade.

“We’ve reached the tipping point and beyond,” said James Chapman, chief financial officer of Dominion Energy Inc., one of the nation’s largest utilities. Dominion, which has started issuing green bonds, plans to spend $ 26 billion or more on clean energy like wind and solar power over the next five years.

After years of intermittent excitement followed by dashed expectations, green finance now looks less like a niche of socially conscious investors and more like an enduring gold rush. Driven by soaring valuations of electric vehicle companies like Tesla Inc. and start-up battery producers, banks and investors are betting the fossil fuel transition is here to stay and they can make money. by supporting that, thus reinforcing the change.

Behind the geyser of capital lies a confluence of forces. Large capital managers see opportunities for substantial profits and are also worried about the financial risks associated with climate change. Many of their clients – giant pension funds and fast young investors – want to put their portfolios behind projects that aim to reduce environmental damage.

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