According to McKinsey, net zero by 2050 would require about $ trillion of investment per year but only about $ trillion per year is being invested today. We are more than 35% short of the annual investment required for net-zero. Let's keep these two numbers in our minds throughout our discussions today: we are 55% below the emissions reduction required by 2030 and 35% below the investments required for net zero by 2050. Filling these two gaps will require a concerted and collaborative effort across the ecosystem. And it needs to be done now. Climate change is already happening and beginning to devastate lives and livelihoods. Just ask the people in Pakistan. There is no collective human endeavour more urgent than climate action. Delaying mitigation efforts to avoid short-term costs will incur a much larger economic and human loss in future. This conference will focus on three key dimensions: Transition, Asia, Collaboration. Let me elaborate. Transition - to reach net zero by 2050 we need effective and inclusive transition strategies. 1/4  BIS - Central bankers' speeches  Effective transition is about greening the entire economy not just growing the green economy. Investing in green technologies and renewable energy is important. But such pure green activities are estimated to make up less than 8% of the global economy. To move the needle towards net zero, we must progressively decarbonise across all sectors of the economy, including hard-to-abate ones like steel, cement, and maritime transport. This means green finance alone is not enough.

This is specially so in emerging markets, where regulatory and political risks heighten the likelihood of default, transaction lead times are long, projects require prohibitively large amounts of start-up capital, and there is limited access to expertise in project development and financing. Second, we need to reduce the risks in marginally bankable transition projects to attract private capital. The return profile on many such projects is not commensurate with the risks facing private financiers or investors. To reduce overall risk and improve bankability, we need more catalytic and concessional funding from the public sector, multilateral development banks, and philanthropic sources. Such funding can be in the form of grants, risk-sharing arrangements, debt at below-market rates, technical assistance, and structuring advice. They can help crowd in additional multiples of private sector funding. But while public capital can potentially do more to mitigate risk, private capital must still bear a fair share of project risk and exercise the appropriate due diligence on project viability and performance. Third, we need to make the financial ecosystem work more synergistically. Banks play a key role as lead managers for financing sustainability projects. However, with limited balance sheets and regulatory capital and liquidity requirements, banks need to offload these loans to institutional investors who have more absorptive capacity. But institutional investors prefer larger deal sizes with a diversified pool of assets to reduce concentration risk. We need to shift towards a portfolio approach to blended finance deals, through the structuring and securitisation of typically illiquid green and transition assets.