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12 Oct 2023

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US Trails in Climate-Related Investment - World Faces Severe Challenges

Capital markets in the United States hold only 6% of fund assets focused on the climate and sustainability, according to a Morningstar report. The amount, $32 billion, is a small fraction of the $447 billion held in Europe and is barely more than 70% of the $44 billion held in China. Total capital markets in the US run into the tens of trillions of dollars, making climate-fund investing barely a speck within the entire picture.

The Morningstar report finds more than 1,200 climate-related funds currently worldwide, up from fewer than 200 in 2018. But even that optimistic news is tempered by the presence of a high amount of total climate-fund investment to be found in blue chips like Alphabet, Microsoft, Roche, and Microsoft, the report finds.

Severe Emissions-Reduction Challenges
Research associated with IDCA has found enormous emissions-reduction challenges among the industrialized countries of the world, especially among the top five polluters: China, the US, India, Russia, and Japan.

Using a color-coded tier system, the research balances the size of each nation's challenge with the economic and social resources each nation has to address its challenge and improve it significantly. China and India are in the highest threat zone, representing the most severe challenges, with the US, Russia, and Japan in the second-highest zone, representing severe challenges.

Europe has significant problems as well: Germany, Italy, Spain and Poland are all in the second-highest tier, representing severe challenges. A dozen European nations are in the third tier, representing serious challenges, including France, the UK, and Netherlands.

Another 20 European countries are in the least severe, fourth tier, representing moderate challenges, including the Scandinavian countries, Finland, the Baltics, and Ireland. All fourth-tier challenges are in countries with 10 million or fewer residents.

Outside of China and India, most Asian nations fall into the second-tier of severe challenges, including all of Southeast Asia except Laos, South Korea, and Pakistan. South America shows severe challenges in Brazil, Mexico, and Peru, with less-severe challenges in Colombia, Chile and others.

Much of Africa and the Middle East are in the highest zones of severity, including Nigeria, South Africa, Kenya, Eqypt, Saudi Arabia, and the UAE. Tanzania stands out in this combined group of nations by falling into one of the less-severe categories, as do Rwanda, Mauritius, and the country of Georgia.

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