Public and private sectors need to accelerate their investment in climate resilient and sustainable infrastructure to meet articulated sustainability goals. To support those public and private organizations, the finance sector needs to manage organizations’ financial investment and risk assessments through collaborative, secure, trusted data and technology platforms. 

The urgency of investment 

Investment in infrastructure of $6.9 trillion USD per year is required to meet global development needs through to 2030. Infrastructure construction and operation is one of the foundations of core economic activity but also the source of 60% of current global emissions.  

Climate responsible and resilient infrastructure is crucial for the world to secure a net zero future and adapt to the climate impacts that are being experienced, especially by the poorest and most vulnerable nations. New infrastructure needs to be prioritized, designed, built and operated in sustainable ways. For this, we need an open and collaborative approach. We need to share our data. We need innovation from trusted sources, enabled by secure, open technology platforms.  

The necessity of managing sustainability investment and risk 

The global financial system faces the critical challenge of channelling finance toward climate and sustainability initiatives. New digital marketplaces are needed to connect global participants across the financing value chain. Consider this: 

1. Digital platforms must enhance process efficiencies.
2. They must deliver data insights.  
3. They must reduce risks and complexities in the value chain and together, they must create equitable benefits and value add for all participants. 

The need for collaborative, secure, trusted data and technology platforms 

To save our most scarce resource, we will need to use our most plentiful resource – data. Data is the backbone of digital climate finance platforms. Access to high-quality, comparable Environmental, Social, and Governance (ESG) data is vital if we are to increase opportunities for sustainable finance. Data sets the benchmarks for climate finance decision making. It improves intelligent processes and standardization. It increases trust and transparency, reduces duplication and provides the crucial security and auditability we need for enhanced reporting.  

Data is also key to quantifying climate risks. It helps us understand how our assets are impacted as the environment changes, as regulation evolves, and as new technologies emerge and shift customer behaviors. 

Scaling-up sustainable infrastructure with digital marketplaces 

Sustainable finance is a challenge for infrastructure projects of all sizes. Secure and scalable end-to-end digital technology platforms can address this challenge. Digital platforms that serve as online marketplaces can connect climate entrepreneurs and funding. They can connect institutional investment with well-structured projects and they can facilitate public and private financing for sustainable infrastructure. These types of end-to-end digital platforms can speed up highly manual and inefficient documentation processes, deal flows and collaboration across ecosystems partners. And, they can do it with added transparency. 

The ‘Finance to Accelerate the Sustainable Transition-Infrastructure’ (FAST-Infra) initiative is an example conceived in early 2020 by Climate Policy Initiative (CPI), HSBC, the International Finance Corporation (IFC), OECD and the Global Infrastructure Facility. IBM is leading the design and development of the FAST-Infra technology platform. 

This end-to-end initiative aims to leverage technology, including blockchain and AI, to close the trillion-dollar sustainable infrastructure investment gap. It aims to do this by transforming sustainable infrastructure into a mainstream, liquid asset class. This will help to scale-up private investment in sustainable infrastructure in emerging and developing economies. 

Climate risk analytics, due diligence and climate resilience   

Technology platforms are intrinsic to the global investment decisions driving positive change for communities, investors and business and they help deliver positive climate impact. Financiers help reduce carbon emissions in four ways: 

• Securing sustainable business interests 
• Minimizing climate-related financial risk  
• Improving decision-making 
• Defining and delivering financial strategy 

Assessing climate risk and financial impacts is complex. It requires the right data, tools and skills to derive actionable insights. Finance practitioners encounter challenges translating data into meaningful insights and are often unable to provide the vital analysis needed for near real-time decision making. 

Putting critical climate-related data at the fingertips of financiers 

In the majority of cases, existing finance and business decision processes are manual and laborious and rely on disparate systems or incomplete datasets. Technology can enhance climate risk analytics. Using dynamic data capture and automated, intelligent, faster processes it can improve climate and ESG impact assessments. It can align to standardized KPIs, benchmarks and performance monitoring. This puts consistent climate-related financial risk disclosures at financiers’ fingertips. 

One of these technology solutions is the IBM and The Climate Service (TCS) alliance. It provides financial institutions with a climate risk analytics service for investors and businesses to better measure and quantify the financial risks associated with climate change. The alliance leveraged IBM Garage to develop the TCS Climanomics® platform using Red Hat OpenShift and hosted on IBM Cloud.  

The platform enables organizations to express the impact of climate change in terms that can form the foundation for investment decisions. It does this by monetising risks associated with climate change. A Major UK Bank recently stress-tested the climate related financial impact of their property mortgage portfolio using the TCS Climanomics® Platform that IBM delivered. 

Technology can be a catalyst in a global financier’s toolbox. It can accelerate action and progress on sustainability goals by mobilizing investments, quantifying climate change risk and digitizing the marketplace for financing sustainable infrastructure.  

With all this complexity how do you start on your journey?  IBM Garage for Sustainability methodology helps companies design and accelerate their sustainability transformations. It helps enterprises refine and focus their ideas, quantify the value of their initiatives using business and sustainability measures, and delivers results in weeks – not months or years.  

Learn more about the IBM Garage and how it can accelerate your path to a sustainable future