Statements & Remarks

Remarks by Secretary of the Treasury Janet L. Yellen at the G20 Infrastructure Investors Dialogue: Challenges and Opportunities in Environment, Social, and Governance-aligned Infrastructure Investment

As prepared for delivery 
Minister Franco, Minister Al-Jadaan, Minister Indrawati and other distinguished guests, it’s an honor to be with you. I want to thank the Italian Presidency and the G20 for inviting me to speak with you, especially about such an important challenge: increasing infrastructure investment in accordance with environmental, social, and governance principles. These investments are key to combatting climate change, and this decade will be decisive.

To keep a global warming limit of one-and-a-half degrees Celsius within reach, we must all get on the right path now. This will be challenging, but the transition to a global, low-carbon economy represents one of the most important and consequential economic transitions in human history.

One piece of that transition must be facilitating greater investment in clean, sustainable infrastructure.

After all, finance and infrastructure both play vital roles in accelerating the path towards a clean energy economy and building a resilient future. Approximately 70% of global emissions come from the use and construction of infrastructure. Financing new high-quality, “green infrastructure” – infrastructure that is both resilient to extreme climate events and emits minimal greenhouse gases -- is crucial to reducing these emissions, and we need you – investors and infrastructure developers – to help lead the transition.

Today, we face an annual global infrastructure investment gap of around $2.5-3 trillion, which cannot be filled by public-sector funds alone. If the world has a realistic hope of reaching our climate goals and avoiding the most catastrophic effects of climate change, we must close this gap by investing in sustainable infrastructure.

Climate change is not the only driver for investing in high quality, green infrastructure. These investments also provide opportunities for the bottom line, as investments that account for environmental, social, and governance impact reduce downside risk and protect returns.

The G20 has worked diligently to catalyze private sector investment in infrastructure. This work is now more important than ever as governments divert resources towards COVID-19 recovery, and the United States is committed to doing its part.

First, to help address the investment gap here in the United States, the Biden-Harris Administration has proposed a plan to invest $1.7 trillion in public finance over the next 10 years. These investments will modernize 20,000 miles of highways and roads, expand the country's broadband infrastructure – and most importantly, they will help catalyze significant private-sector investment in infrastructure and green technologies. For example, the plan calls for a proposed investment tax credit that would mobilize tens of billions in private investment in high-voltage power lines alone.

Under this plan, 40% of the benefits of climate and clean infrastructure investments will go to underserved areas, including rural and tribal communities. These investments will create millions of high-paying jobs that strengthen working communities and achieve environmental justice. When President Biden thinks of climate, he thinks of jobs – and vice-versa. He believes tackling the climate crisis presents an historic economic opportunity.

We are also working internationally.

Mobilizing international climate finance is an important part of enabling our partners to pursue ambitious infrastructure and climate agendas. We cannot hope to succeed in achieving our climate change goals if we do not have a credible plan for unlocking the required capital flows. To that end, President Biden announced the U.S. International Climate Finance Plan at the Leaders’ Summit on Climate in April.

As part of this plan, Treasury is engaging in international efforts to improve information on climate-related risks and opportunities to identify climate-aligned investments. Treasury assumed the co-chair of the G20 Sustainable Finance Working Group to help drive international cooperation on this work. Likewise, we strongly support the G20 Infrastructure Working Group’s efforts to operationalize the Quality Infrastructure Investment Principles to help investors include climate-aligned infrastructure in their portfolios. In addition, Treasury will work with international partners to identify and address barriers to emerging market infrastructure investments through Sustainable Climate Finance Dialogues.

In many respects, the private sector is already leading the way.

Over the last several years, ESG investing has increased tremendously. ESG fund assets have grown from just $10 billion in 2015 to $246 billion in March 2021. Similarly, sustainability- linked debt issuances have grown at an annualized rate of 60% over the last eight years.

We must do more, though. In order to mobilize additional investments into clean infrastructure, investors are demanding clear and comparable ESG data and metrics. Poor quality or availability of ESG data and lack of standardized ESG metrics are often cited as barriers to further deployment of sustainable finance. And lack of clear measurements also opens the door to “green washing” – that is, inflating environmental and emissions benefits to attract investors.

To improve infrastructure data quality, we are working in the G20 to develop indicators for the Principles for Quality Infrastructure Investment, or QII. As many of you know, the QII principles were endorsed during the Japanese G20 presidency in 2019, and they incorporate ESG considerations, resilience, and life cycle cost. Negotiations on QII indicators have been extensive. There are legitimate concerns over their potential impact on investment and project costs. Yet we continue to hear from private investors that consideration of ESG factors in their financing decisions has shifted from being “nice to have” to being “must have.”

This event is an excellent opportunity for investors and developers to communicate these views and respond to concerns over the cost of ESG measurement and monitoring in infrastructure.
We need to hear from you today.

While we have been discussing ESG principles and indicators for infrastructure in the G20, the private sector has launched ESG infrastructure initiatives. I commend these efforts, and I would urge greater collaboration between governments and private sector initiatives as we further identify and refine the metrics most useful for promoting infrastructure investment. We should work together.

In summary: As governments work towards COVID-19 recovery and steer our economies towards a net zero future, the private sector will need to play an outsized role in financing and developing infrastructure. It is my hope that this dialogue helps unlock progress towards greater ESG clarity and transparency so these investments can play a key role in closing the infrastructure gap and lowering global emissions.

Thank you all.