G20: Developing countries need climate finance now to halve emissions by 2030
María Mendiluce, CEO of the We Mean Business Coalition
This article first appeared on Business Green.
The temperature increases in the Pacific North-West and India highlight the urgent action needed to halve global GHG emissions by 2030. This goal is what all nations committed to in the Paris climate Agreement and is now supported by thousands of influential businesses.
As we head towards Glasgow for the critical COP26 UN climate talks we need to strengthen the trust that led us to the unprecedented multilateral agreement achieved in Paris.
A successful COP26 will set us on track to halve emissions. It will signal to business that it’s time to go all in and transform every part of every industry into thriving, decarbonised operations providing the products and services we need for a net-zero world. And that it’s time to bring this transformation to developing countries where most emissions growth is predicted.
Business needs this signal now.
However, some issues risk eroding international trust which could put the negotiations in jeopardy. One key blocker is the $100bn commitment. Back in 2010, developed countries agreed to support poorer nations to both decarbonize and build resilience to climate impacts. They committed to mobilise $100bn per year by 2020 to support climate action in developing countries.
The rationale was that if governments mobilised public money for climate action it would kickstart climate action in developing countries and send strong market signals to private investors that a global move to stabilize the climate is underway. This would trigger investors to follow the public money and invest at scale in low-carbon and climate-resilient solutions and industries in developing countries.
However, in 2018 only $79 billion had been delivered and data to be published shortly shows that we will probably not have hit the mark for 2020. The recent report from the Overseas Development Institute contains the latest official data from 2018. It shows Germany, France and Japan are contributing their fair share, Italy and UK are getting there, but the US, Australia and Canada are not on track. If all wealthy G20 countries honour their commitment now it will build trust and create a virtuous cycle to unlock larger flows of private finance.
The investment will also generate simultaneous solutions to the COVID-19, social equity and climate crises, since research shows that a green recovery is better for business, jobs and growth.
What business needs from the G20 countries now is leadership, that moves from promises to supporting the private sector to halve emissions by 2030. By mobilising the $100bn now, the G20 can:
1. Support all countries to cut emissions and harness business and climate wins
A recent report from the UN Secretary General’s group of experts shows emerging markets and developing economies account for two-thirds of global emissions. Many are also the most vulnerable to climate change impacts. A strong program of support from wealthy G20 nations to tackle the debt and financing needs of these countries is a win-win proposition for the global economy and for the climate. Governments are not alone. Multinational companies are already voluntarily playing their part. Over 630 companies are now committed to Business Ambition for 1.5C, which means they will halve their emissions by 2030. These companies are experiencing improved investor confidence, reputation and growth alongside futureproofing their businesses from climate-related risk.
2. Reconfigure finance frameworks to trigger private investment to developing nations
Business needs all developed and developing countries to set the right investment framework conditions to speed regulatory change and trigger the climate investments required. Companies in developing countries need financial and capacity building support to keep up with the pace of change. With 65-90 per cent of companies emissions coming from supply chains – much of which is in developing countries – the $100bn will generate further private investment from companies that need to decarbonise their supply chains.
3. Scale up climate adaptation to maintain a stable global economy
The $100bn commitment is also intended to help developing countries adapt to the impacts of climate change. So far only 21 per cent of the funds are going to adaptation. Global business is highly dependent on supply chains in developing countries. By channelling more of the $100bn to adaptation, the G20 will create new business opportunities like developing new products and services for understanding, planning for, and responding to climate change. These would help communities adapt, avoid the damage and costs of climate change impacts and prevent knock on effects across global economies. Companies in developing countries would be better able to build resilience and decarbonize, which in turn would help international business decarbonise, maintain stability across whole value chains and help those countries remain attractive to investment.
At the G20 meetings this month, the stakes for climate couldn’t be higher. Decisions on the $100bn, coupled with a reconfiguring of our global financial system through mandatory disclosure of climate risk and putting a price on carbon will play a pivotal role.
To get on track for halving emissions by 2030 and a safe, thriving future, the $100bn must be mobilised and increased fast. This will drive business to go all in for scaling investment on climate solutions worldwide.
Will wealthy G20 nations prove that they really all in to collaborate with poorer nations and solve the biggest threat of our time?