Long-term Thinking is Critical to Sustainable Finance

A good number of challenges persist. The pushback stemming from US policy shifts has continued, with asset managers and other financial institutions tempering or even u-turning on their net-zero targets. The world’s largest asset manager, Blackrock, exiting the Net Zero Asset Managers Initiative is a high-profile example, while recent Morningstar data shows that US investors cut their exposure to sustainable funds for a tenth straight quarter in Q1 2025.

In addition, a study by the Cambridge Institute for Sustainability Leadership published last month, ‘Rewiring Finance — a New Approach to Financing a Sustainable Economy’ , suggests that attempts to scale up sustainable finance have failed at delivering the necessary change required to transition to a sustainable economy.

It argues that a lack of clear sustainability sectoral pathways are to blame, while the cost-of-living crisis and mistrust in government institutions are also stalling the momentum required for longer-term change.

Regulatory complexity is a big issue too. The EU, for instance, published its Omnibus Simplification Package in a move designed to streamline legislation and make regulation around sustainable finance more efficient. However, it could also be interpreted as something of a weakening of green legislation – the scaling back of the Corporate Sustainability Reporting Directive (CSRD) could, some experts note, threaten to undermine long-term economic resilience.

But there are reasons for optimism.

According to the London Stock Exchange Group, for instance, the global green economy has reached a total value of US$7.9 trillion and in the first quarter of 2025, accounted for 8.6% of global listed equities. Of particular interest in the LSE Group data is that the green economy in emerging markets is growing at nearly twice the rate of developed ones.

A recent report from the Confederation of British Industry showed that the UK’s net zero economy is growing three times faster than the economy overall.

Looking forward, the global sustainable finance market looks set for exponential growth too, projected to rise from US$6.9 trillion in 2024 to US$44.2 trillion by 2034.

At the heart of all this is a need to think in the long-term, resist short-term reactions, and instead adopt strategies that integrate longer-term time horizons.

As recent global politics around the world has shown, changes in policy can have big implications for corporate and investor behaviour. As custodians of considerable capital and wealth, IFCs have a big role to play here; a responsibility to mitigate and challenge that short-term thinking. By adopting a ‘big picture’ perspective, I believe IFCs can provide the framework needed to drive positive change well into the future.

As was highlighted by our keynote speaker at our summit, we have the technology and the tools to do the right thing; the only obstacle is ourselves.

Our view as an IFC is that we have the skill set in Jersey to align well with the needs of the planet, including governance, the ability to mobilise capital efficiently, experience in multi-stakeholder collaboration, and expertise in mitigating risk.

We have a long-term vision, too. The multi-generational objectives of global families is embedded in the fabric of what we do as an IFC. With private capital set to prove critical to meeting sustainable finance goals, leveraging the time horizons of those families and drawing on the concept of legacy to go beyond the immediate market challenges with be crucial.

And we have our own long-term vision as an IFC too, backed up recently by the Government of Jersey publishing its sustainable finance action plan last year.