For more than a decade, governments and businesses progressively issued conventional green and sustainable fixed income securities to address social and environmental issues. According to the Climate Bond Initiative, their issuance is on track to reach $1 trillion in issuance by 2023. However, there is growing scepticism regarding the market's integrity. Is it making a meaningful contribution to reducing sustainability and climate risks? Unfortunately, green labels do not seem to be an effective signal for identifying sustainable improvers.
In its final statement for the G20 Finance ministers and central bank governors, the T20 acknowledged that 2021 ‘marks a turn in the rich history of infrastructure investments and financing issues within the G20, in a time of more complex crisis than 2008.’
There is no shortage in economic literature on the importance of economic diversification for healthy, resilient, and sustainable growth, and numerous real case studies support such recommendation. Put simply, a country that puts ‘its eggs in one basket’ is at the mercy of exogenous factors that go beyond any government control, thereby undermining ‘prospects for longer-term economic growth’, as put by the World Bank.
We are approaching an energy inflection point in the global economy: plentiful oil supply, a demand plateau by 2030, and more competitive renewable-energy options, even as investors and consumers grow leerier of carbon-intensive products. Oil producers’ future in the Gulf is still one in which oil revenues fail to meet growth goals of governments, with a knock-on effect on job expectations for citizens.