UNLOCKING CLIMATE FINANCE TO BUILD RESILIENCEDavid Wei
Last year, the adoption of the Paris Agreement sent an unequivocal signal that the global economy will move along a low-carbon path. This year, attention has turned to the climate finance needed to achieve this goal. In Paris, We Mean Business called for climate finance at scale, including public climate finance from governments, and policy enabling environments that will mobilize private climate finance. We continue to do so in Marrakesh.
The satisfaction of the pledge by developed countries to jointly mobilize $100 billion per year of climate finance by 2020, spearheaded in Copenhagen by then-Secretary of State Hillary Clinton, was crucial to securing an ambitious Paris Agreement. Developed countries need to honor their promise. This is why we welcome the recently released Road Map to $100 billion, which makes a conservative and indicative projection of $67 billion in public climate finance in 2020, with public adaptation finance doubling from 2013 to 2020. At COP22, governments should begin to implement this road map. This will enhance the trust necessary to complete technical rules under the Paris Agreement, and also provide additional predictability for developing countries seeking to implement their NDCs.
For our part, We Mean Business stands ready to help maximize the private climate finance leveraged by public climate finance. The road map shows that the $100 billion target can be met in part by increasing the proportion of projects which leverage private finance, and increasing the ratio of private finance mobilized. We therefore call on governments to quickly execute the strategy outlined in the road map. This means supporting the design of domestic policies which speed up mobilization of finance, pioneering new tools and initiatives, de-risking investments, and building capacity to develop a pipeline of bankable proposals.
Building the low-carbon economy will require not billions but trillions in low-carbon investment, only a fraction of which can come from bilateral public finance and multilateral development banks. To be successful, the financial system must shift private capital by capturing the long-term benefits of mitigation and adaptation. In its 2016 report, The Sustainable Infrastructure Imperative, the Global Commission on the Economy and Climate outlined some of the enabling policies which could promote this shift:
- Common standards for green bonds which will scale up the market
- Green Investment Banks whose strategies are tailored to national and local contexts, and which have historically achieved higher ratios of leveraged private finance
- Regulations which require that climate change and other environmental issues are accounted for in business decision-making
- Enhanced corporate reporting and cross-border harmonization of disclosure standards, including through the upcoming guidelines from the FSB Task Force on Climate-Related Financial Disclosures
In addition to policies which transform the financial system to support low-carbon investment, the full and speedy implementation of NDCs through domestic legislation and regulation, and the enactment of meaningful carbon pricing, is key to shifting the trillions we all need.
Honor the Copenhagen pledge, maximize leverage of private climate finance, and shift the trillions by transforming the financial system and implementing NDCs. This is our road map to building the low-carbon and climate-resilient economy. We ask governments at COP22 to work with us to make it a reality.
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