Green finance grew to €300 billion (£258bn) in Europe last year, however, this still falls heavily short of the amount needed for net zero.
That’s according to a new report by New Financial, which claims that green finance currently only represents 12% of capital markets activity and this will need to rapidly increase to keep 2050 alive.
The report claims a ‘reality check’ is needed on how much progress has actually been made when it comes to green finance, with an estimate that between €600 billion (£516bn) and €1 trillion (£861bn) will need to be invested annually by the continent.
From 2017 to 2021, the analysis states that approximately €750 billion (£646bn) of green finance was raised across Europe – but this needs to triple; for the right level of investment in renewables and clean technologies to take place.
Overall, the percentage of green finance making up capital markets doubled last year, which is promising, however, this needs to grow at a far quicker rate to balance the continental economy, the report stresses.
The UK is also lagging behind the EU when it comes to green finance – with 5% of UK capital markets activity consisting of green finance last year; where the continent was four years ago.
New Financial stated: “We define ‘green finance’ as capital which funds projects that progress the transition to a clean energy economy, such as solar farms, wind turbines, hydroelectric projects and electric vehicles.
“In addition to ‘labelled’ green bonds, we analysed activity in the equity, loan and venture capital markets to identify ‘green finance’ based on the use of proceeds of the capital raised.”