illuminem summarizes for you the essential news of the day. Read the full piece on Foreign Policy or enjoy below:

🌍 Driving the news: Decarbonization efforts are lagging behind, with even top-performing high-income countries failing to meet the Paris Agreement goals. A major reason is the profitability gap between fossil fuels and renewables. Fossil fuel investments yield returns three times higher than renewables, driven by monopoly power, while renewables suffer from intense competition

🔭 The context: Commercial banks prioritize profitability over social and ecological objectives, leading to significant investment in environmentally harmful sectors like SUVs, fast fashion, and private jets, while underinvesting in crucial green initiatives like public transit and building retrofits. There is currently no plan to phase down fossil fuel investments, highlighting a structural problem that needs urgent attention

🌍 Why it matters: Without realigning financial incentives, waiting for capital to drive decarbonization is a doomed strategy. Central banks have the power to guide credit toward more ecologically sustainable sectors, a method proven effective in post-war industrial policies and now gaining renewed attention

⏭️ What's next: Advocates call for credit guidance to limit investments in destructive sectors and boost green technologies, potentially offsetting inflationary pressures and preventing debt bubbles. The approach could help central banks balance market stability with ecological responsibility

💬 One quote: “The greatest threat to stability in the 21st century is the risk of ecological breakdown,” highlighting the need for precautionary policy action to avert catastrophic risks

📈 One stat: Returns on fossil fuel investments are approximately three times higher than returns on renewable energy investments, perpetuating the imbalance in capital allocation

Click for more news covering the latest on sustainable finance