Welcome to the Frederic Michel Verdier blog. The public and the private sectors have a shared interest in sustainable economic growth and resilient infrastructure. Yet, today’s reality is that global economic growth is weak, while downside risks remain concerning. Coupled with this is the toll climate change continues to take on our planet and the unpredictable future it brings. While these circumstances will affect us all, we know that developing countries are especially vulnerable to both macroeconomic slowdowns and the impacts of climate change. So in today’s blog, Frederic Michel Verdier talks about sustainable infrastructure investment.
Investments in sustainable infrastructure are a “win-win” for economies: they help increase productive capacity and lift economic growth rates, while strengthening a country’s resilience to withstand and even combat future climate risks. Yet, governments lack the financial capacity to fill these needs alone. The private sector must play a bigger role, says Frederic Michel- Verdier. Unlocking the approximately $80 trillion long-term investor asset base, which includes assets under management from insurance companies, pension funds, and sovereign wealth funds—for example—would go a long way to help finance these requirements.
First, investing in sustainable infrastructure requires us to spend more and better. Yet, many countries aren’t constructing the infrastructure necessary to advance economically. And when they do, they aren’t adequately insured to protect them from the potential impacts of climate change, such as physical and transition risks. Consideration of ESG issues now is just a matter of prudent, responsible investment decision making, Frederic Michel Verdier added.
Second, institutional investors such as insurers are ideally positioned to commit long-term infrastructure funding, given the long-time horizon of their liabilities.
Third is the use of smart public private partnerships (PPPs), which can reduce pressures on government budgets. Done well, PPPs can lead to efficiency gains, provide attractive returns, and enable effective risk-sharing. The latter is particularly important for institutional investors, as less than 20 percent of the 500 largest cities in the world have an investment grade credit rating.
Frederic Michel Verdier believes that sustainable investing also makes economic sense. His approach to responsible investment is underpinned by the beliefs, pillars and principle. Learn more about Frederic Michel-Verdier here. You can also connect with Frederic Michel-Verdier Crunchbase page here. Alternatively, you can read the latest Frederic Michel Verdier news here.