Only 16 percent of an estimated $3.8 trillion in needed climate-related investments are being met, a study from the Rockefeller Foundation and Boston Consulting Group (BCG) finds.

The report, What Gets Measured Gets Financed: Climate Finance Funding Flows and Opportunities (76 pages, PDF), revealed a formidable gap in investment toward climate change mitigation, where the absence of data and data sharing has proven to be a “major roadblock” to achieving net zero emissions by 2050. Released in time for the United Nations Climate Change Conference (COP27) being held in Sharm El-Sheikh, Egypt, this week, the report highlights the need for governments, corporations, and investors to accelerate capital flows through 2025, expand tax incentives and subsidies, emphasize the need to collect and share better data, and prioritize transparency to measure effectiveness relative to climate-related outcomes.

Although the report noted global investment in electric vehicles is set to achieve 65 percent of needed capital by 2030, most areas remain grossly underfunded including a 95 percent investment shortfall in carbon capture and sequestration and fuel cell technologies. Overall, the report found that emerging markets and developing economies (excluding China) need $1 trillion in climate investment per year but are currently receiving only 27 percent of needed funds. By contrast, about 80 percent of climate mitigation capital in 2020 was directed to China, Western Europe, and North America—where data is most accessible.

“We all know that more finance is needed for climate change, but until this report, there was no real way to compare how the many different types of financial flows were adding up relative to needs, or to determine where and into which sectors investment is most urgent,” said Veronica Chau, BCG partner and director of sustainable investing and social impact. “This is a crucial decade for climate-finance actors to go from pledging support for climate initiatives to deploying it. But the absence of clear and reliable data has been a major roadblock.”

(Photo credit: Getty Images/Laurence Dutton)