Governments in the US and Europe are scaling back their green finance commitments, with a projected $50 billion cut in climate aid by 2026, finance leaders warned at the recent Sibos 2025 conference in Frankfurt.
Previously key funders of sustainable development, the public sector is part of a broader political shift towards addressing short-term economic pressures, despite growing urgency to address climate change challenges.
During the Sibos conference, John Murton, sustainability advisor at London-headquartered financial services organization Standard Chartered, argued that banks have a responsibility to pick up the slack by advising clients on climate risks and encouraging investment in sustainable sectors. There’s clearly an urgent need as well, given that more insurance companies are refusing to underwrite properties in high-risk flood or wildfire zones, simply because the climate risk is too great.
“I think there's a strong case to be made for community thinking about the operating role of development banks. In particular, we need to shift away from loans to more early-stage grants, technical assistance, institution building, and also equity investments that we know can be capitalistic,” Murton said during a session, according to a report by Finextra.
In light of shifting priorities, there’s a growing demand for better climate resilience that financial services institutions can’t afford to ignore. Profit and purpose are closely aligned in the area, even if state-backed incentives and public investments are dwindling. For example, Murton highlighted ideas like biodiversity funds and nature-resilient bonds linked to positive environmental outcomes, the hope being that such measures could attract private investors to areas traditionally funded by public money.
Fintech and financial services firms are already responding to the call by actively working on resilient infrastructure solutions powered by new technologies like AI and open collaboration. For example, Edinburgh-headquartered Lloyds Banking Group recently launched a geospatial AI-powered platform to rate flood-mitigation investments, effectively creating an analytics solution that provides guidance on where to invest in natural assets like forests and wetlands to reduce flood risks for communities. Fintech startup Naturemind.ai has emerged as another winner in this endeavor by developing a multi-agent AI platform to leverage forward-looking projections to help identify future climate risks.
While there’s a clear and growing need for the financial services sector to align business models with sustainability needs, that’s not to say the road ahead will be easy. Anti-ESG sentiment is growing in many parts of the US and Europe, which is partly due to climate change skepticism in certain political spheres, but also due to widespread accusations of greenwashing. Regulators and customers alike are understandably demanding greater transparency, pushing companies to track their impacts with real, measurable KPIs that can be validated and verified.