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SEB’s The Green Bond Report: The Climate Crisis Gets Real

This summer, extreme weather events and soaring energy prices have highlighted how the strategy in the fight against climate change appears to be failing. That development was underscored by the latest report from the Intergovernmental Panel on Climate Change (IPCC), which contained its sternest warning on the climate so far. In the latest edition of SEB’s The Green Bond report, we focus on the physical risks of climate change, the cost of addressing the climate crisis, and the investments needed to reach the goal of net zero emissions by 2050. We estimate the economic costs to be at least USD 4 trillion annually over the coming decade.

“Reality is starting to bite as the cost of extreme weather events is rising both in terms of property and human lives,” says Thomas Thygesen, Head of Research, Climate & Sustainable Finance, at SEB. “At the same time, soaring natural gas prices highlight the danger of reducing one energy supply without adding another. In the latest issue of The Green Bond - titled Floods, Fires and the IPCC: The Climate Crisis Gets Real - we ask ourselves if this means that it is time to panic. Our conclusion is that we certainly need to start spending, fast.”

In the report, we estimate that USD 4 trillion – or 5 per cent of global GDP - will be required each year if the world is to reach the goal of net zero emissions by 2050. We also look closer at how this will impact governments and how funding for the required investments can be found.

“The financial industry will play a crucial role in helping to raise funds for these investments, not least through sustainable financing solutions such as sustainability-themed bonds and loans,” says Gregor Vulturius, Advisor at Climate & Sustainable Finance at SEB and co-editor of The Green Bond.

The report includes an updated forecast for sustainable financing and we now expect that total global issuance will exceed USD 1.5 trillion this year, driven by corporates and the public sector. The previous forecast was for sustainable financing to exceed USD 1 trillion this year.

The Green Bond also features an article by Richard J.T. Klein, Senior Research Fellow at the Stockholm Environment Institute and Professor of Geography, Climate Policy and Development at Linköping University. Together with SEB’s Gregor Vulturius, he comments on the implications of the IPCC report for business and finance.

In addition, a contribution from Munich Re assesses the role of the insurance industry as part of the solution to managing risks in connection with climate change. Moreover, the think-tank E3G sets the stage for the upcoming COP26 summit and looks at the key role of Development Finance Institutions in supporting the broader finance mobilisation that is essential for the low-carbon transition. 

About The Green Bond report
SEB, which together with the World Bank developed the green bond concept in 2007/2008, publishes the research publication The Green Bond 5-6 times a year. It strives to bring readers the latest insight into the world of sustainable finance through various themes. Even though the report covers all kinds of products and developments in the sustainable finance market, we have decided to keep its historic name – The Green Bond – as a tribute to our role as a pioneer of the green bond market. You can find The Green Bond report at sebgroup.com and here.

For more information, contact:
Lina Apsheva, Climate & Sustainable Finance
+46 70 767 6527
lina.apsheva@seb.se

Press contact:
Niklas Magnusson, Group Press Officer
+46 70 763 8243
niklas.x.magnusson@seb.se

SEB is a leading northern European financial services group with a strong belief that entrepreneurial minds and innovative companies are key in creating a better world. We take a long-term perspective and support our customers in good times and bad. In Sweden and the Baltic countries, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and the United Kingdom, the bank's operations have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB's business is reflected in our presence in more than 20 countries worldwide, with around 15,500 employees. At 30 June 2021, the Group's total assets amounted to SEK 3,445bn while its assets under management totalled SEK 2,401bn. Read more about SEB at https://www.sebgroup.com