Achieving net-zero emissions by 2050 and limiting global average temperature increases to 1.5ºC above pre-industrial levels are critical to mitigating the worst impacts of climate change. Reaching these goals requires a rapid transformation of the global economy, where financial markets play a pivotal role by offering financial products and services that enable emissions reductions and scale low-carbon solutions.
The economy-wide transition to a low-carbon future presents significant investment opportunities. According to the IEA, global clean energy investment needs to rise to approximately $4.5 trillion annually by 2030 to meet the 1.5°C target. Similarly, Citi estimates that decarbonising sectors such as aviation, shipping, road freight, steel, and cement could demand up to $1.6 trillion per year.
Equity investments in transition-enabling companies are expected to grow during this critical decade for climate action. Private equity, venture capital, and asset managers are likely to see increasing demand for transition finance. Other financial instruments and asset classes, including insurance, real estate, infrastructure investments, and public equity products like transition-related ETFs and indices, will also play a key role in scaling transition finance. Each asset class offers unique contributions, requiring tailored guidance to ensure its credibility.
Building Momentum with Transition Finance
Transition finance is becoming a cornerstone of sustainability efforts, accelerating the energy transition, fostering international environmental cooperation, decarbonising transport, and advancing regional and local climate initiatives. Frameworks like the Glasgow Financial Alliance for Net Zero (GFANZ), Climate Bonds Initiative (CBI), and taxonomies such as the Singapore-Asia and ASEAN taxonomies are guiding the market towards greater convergence and clarity.
Accessing transition finance requires entities to present credible plans for achieving net-zero by 2050. This planning not only mitigates environmental and financial risks but also boosts competitiveness for Irish and European industries. For Ireland, it is a strategic approach to identifying funding gaps, uncovering investment opportunities, and mobilising resources to achieve climate neutrality.
To fully leverage transition finance, the EU Commission and major public finance providers, such as central banks and national development banks, should establish targeted programs to identify sectoral priorities with businesses, banks, and insurers. Setting a unified direction for Ireland’s economic transition through multistakeholder engagement will ensure that transition finance tools are effective and aligned with national goals.
Ireland’s Sustainable Finance Ecosystem
A robust sustainable finance ecosystem in Ireland will require a focus on skills development, creating a strong stakeholder network, and establishing a knowledge hub to support informed decision-making. These efforts will underpin the country’s ability to mobilise and manage finance for climate neutrality effectively.
These challenges and opportunities offer a valuable area for exploration, particularly for Ireland and the UK. At our event, the Irish-U.K. Transition Finance Summit, we aim to foster an objective dialogue with key stakeholders, working collaboratively to identify practical strategies to drive progress in transition finance.
Register for the event here to join the conversation and help shape the future of sustainable finance.
