Will lack of green capex hamper transition finance push?

The Responsible Investor Podcast

When Responsible Investor talks to investors about transition finance, capital expenditure almost always features.

Folksam’s chief economist Marcus Svedberg told RI earlier this year that studying capex flows is a good indicator of where companies are going, and that ideally “you want to be overwhelmed by how much they are investing in new technologies, technologies of the future”.

And there are some positive signs. For example, so far in 2024, companies have reported around €250 billion of taxonomy-aligned capex, up from €191 billion in all of 2023.

But while a company’s investments, or plans to invest, in transitional and decarbonising activities will be crucial to analyse whether or not it is transitioning, it is looking unlikely that investors can expect to be overwhelmed by a large number of their holdings.

For example, just 1 percent of the 1,027 high-emitting companies assessed by the Transition Pathway Initiative have set goals to align capital expenditures with decarbonisation targets, according to the investor-backed body’s latest State of the Transition report.

In this episode, RI deputy editor Elza Holmstedt Pell and feature writer Paul Verney discuss transition finance and capex based on insights from recent investor conversations. Additionally, Elza and RI reporter Fiona McNally give initial updates from the first day of discussions at the PRI in Person conference in Toronto. [TIME STAMP 24:05]