NEWS of devastating hurricanes, floods, droughts, wildfires and temperature extremes underscores the urgent need to combat climate change. Yet by most accounts, the global response has fallen woefully shy of what’s needed. Many fear even the modest targets of the Paris climate agreement will not be met.

Is it time to throw in the towel? We think not. That’s because for each of the big four greenhouse gas emitters – China, India, the US and EU – we are seeing positive examples of what clear-eyed policy can do in the fight against climate change. Investors just need to know where to look. These developments also show the vital role investors have to play in tackling this most pressing of issues.

Politicians are both a help and a hindrance when it comes to addressing climate change. In the US, President Trump has back-tracked on many environmental issues, including officially withdrawing from the Paris agreement. The polarised nature of the debate, coupled with the four-year investment cycle, has created uncertainty about future US climate-change policy.

However, there are many encouraging developments at state level. Importantly, local authorities have significant power to regulate the energy industry and pass environmental law. US states such as California, New York, Massachusetts and New Jersey have passed substantial legislation targeting emissions.

China’s political landscape is markedly different from that of the US, but this can be a positive for climate action. Here, the Communist Party has centralised control, allowing for a long-term, consistent approach to climate change. At a time when Beijing views CO2 mitigation as a real-time crisis because of the link between emissions, pollution and lower life expectancy, policy and actions can therefore adapt quickly.

As political structures go, the EU falls somewhere in the middle. It is a patchwork of parties from across the ideological spectrum, each with national interests. Despite this, there exists commonality when it comes to climate change.

This includes the most ambitious emissions-trading system in the world, covering approximately 45 per cent of member states’ total greenhouse-gas emissions. There are concrete signs these measures are working: in 2017, emissions were 22% lower compared with 1990 levels. The EU has pledged to achieve a 40% reduction in greenhouse gas emissions relative to 1990 by 2030.

Irrespective of the political landscape, the battle against climate change is creating new opportunities for investors.

Take bonds. In the US, investors increasingly have the opportunity to invest directly in the states and localities that implement climate action through municipal bonds.

Cities, states, and agencies use these to finance many of their infrastructure needs. This includes responding to, and preparing for, the effects of climate change.

Meanwhile, the EU is one of the easiest places in which to invest. Its renewables market is well developed relative to other regions and EU utilities companies are among the world’s largest issuers of green bonds.

In China, corporate green bond issuance is growing, albeit from a low base, and attracting investors. At the same timer, the country’s capital markets have become more open and there are also more relaxed caps on foreign investment, while investor eligibility and channels into the bond market have increased.

As for India, the recently amended Electricity Act now permits 100% foreign direct investments in renewable energy projects. In July, the ruling BJP party launched a scheme to encourage global companies to establish plants that produce solar cells, solar electric charging infrastructure, and lithium storage batteries.

Despite these measures, there’s still a long way to go. Indian fossil fuel subsidies remain around six times those available to renewables. Many of the central government’s post-2020 targets are not yet backed up by binding legislation. In China, the main electricity grids still predominantly use coal.

Meanwhile, a second term for President Trump could result in the US further withdrawing from its environmental obligations. This could put pressure on even the most autonomous of states.

Nonetheless, we believe that the fight against climate change is not lost. We only need to look at the EU and many US states to see what determined policy can achieve. Investors also have an important role to play, assigning capital to where it can do the most good.

The foundations for more ambitious action are in place; we must ensure that we build on them before it’s too late.

Stephanie Kelly is a senior political economist at Aberdeen Standard Investments.