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Major Asian economies, including India and China, require more than $7 trillion investment to meet the stated ambition to limit global warming to 2 degrees Celsius, a new report said on Tuesday.
The study 'Investing for the Climate in Asia' also found that financial institutions need to do more before they can fully unlock this multi-trillion opportunity.
Launched by Asia Investor Group on Climate Change (AIGCC), an initiative to create awareness among Asia's finance sector about climate risks and opportunities, the study reviewed the disclosure of top financial institutions across the region.
Undertaken by Asia Research and Engagement, with support of Australia and New Zealand Banking Group Limited, it found that 31 per cent of the institutions factored climate change risks into their financing operations, with 61 per cent of banks referring to green products and 56 per cent providing some quantification of their exposure.
It said financial institution were factoring climate change risks into their policies and offered green finance products. But only over a quarter of banks referred to climate change factors as a reason to limit financing and 81 per cent disclosed their policy on responsible lending, it said.
Many nations across the region are investing in the policy frameworks and commitments necessary to drive investment into climate solutions.
However, much remains to be done, the report said.
"We know that between 2014 and 2035, $7.7 trillion is needed for renewable energy and energy efficiency to meet the demands of China, India, Japan, and South East Asia if the world is to meet a 2 degrees Celsius warming target," said Emma Herd, CEO of the Investor Group on Climate Change.
"The finance sector has recognised this opportunity and is gearing up fast," said Herd at the launch of AIGCC here.
"While it's clear that progress is uneven and gaps remain, such as a need for greater focus on climate risk in investing, progress over the past two-to-three years has been remarkable. There's no doubt that a great transition is on," Herd said.
The report said that the physical effects of climate change continue to worsen and new regulations and policies, spurred by national climate commitments and the Paris Climate Agreement, are rebalancing the playing field towards low carbon economies and away from high energy, high carbon activities.
According to the Intergovernmental Panel on Climate Change, global warming of more than 2 degrees Celsius would have serious consequences, such as an increase in the number of extreme climate events.
In Copenhagen in 2009, countries stated their determination to limit global warming to 2 degrees Celsius between now and 2100.
