It’s Time To Move Beyond Conversations About Climate Finance
Image Source: Engie Impact
As the New York Climate Week draws to a close, this article will summarise some of what has been discussed on climate finance as we count down to COP29 - the ‘Finance COP’. The theme of NY Climate Week 2024 was ‘It’s Time’, drawing attention to the urgent need to make good on the promises that have been made. The following are some of the highlights of the Flagship Session Two titled ‘It’s Time to Deliver on Climate Finance and Power Sustainable Growth.’
The first panel of the session was titled ‘Investing in a diversified future for fossil fuel economies - profitable and sustainable.’ Participants drew attention to the fact that countries in the developing world are exploiting fossil fuels in some instances to finance their ballooning debt and the need to restructure or cancel the debts of many of these countries. In a similar vein, in the third panel, ‘How do we invest our way to net zero,’ Ambroise Fayolle noted that we are pretty close to the tipping point where renewable investments will be as equally bankable as fossil fuel ones. Oil assets are being increasingly stranded and green investments are becoming more profitable than before. He also said that investments in batteries or hydrogen can be made using blended financing by bringing together funding from banks like the EIB as well as grants from institutions like the European Commission.
The second panel addressed the question of ‘What the world must do to facilitate access to equitable climate capital.’ Makhtar Diop, Managing Director of the International Finance Corporation (IFC) said that data and de-risking of investments in developing countries is needed. More quality data is needed to inform proper evaluation of the risks of investing developing economies, risks which are currently being overestimated in emerging markets. He also noted that the gendered implications of climate change must be incorporated into financing and that his organisation is finalising a new gender strategy with KPIs reflective of this paradigm. Nigar Arpadarai, UN Climate Change High-Level Champion for COP29 noted that global climate action should include SMEs. SMEs are the backbone of the economy yet currently could do much more to incorporate ESG considerations into their operations.
The last panel, ‘Turning climate finance into climate justice,’ featured Hon. Ryan Pinder, the Attorney General and Minister of Legal Affairs for the Bahamas. He noted that a vulnerability index is one way climate finance can evolve to meet the needs of vulnerable nations. It will make funding more accessible and equitable without overburdening recipient countries with excessive conditionalities. It would also avoid the risk of using more traditional measures like GDP per capita. Such measures can be misleading about the distribution of wealth in developing countries, like the Bahamas, and preclude them from accessing concessional financing. Examples of how he has used the law to ensure that developed countries meet their financial commitments include seeking an advisory opinion from the International Court of Justice on whether states can be held liable for neglecting a climate or greenhouse gas regulation and incorporating environmental metrics into the terms of reference for the Global Tax Convention being sponsored by the UN. He opined, in line with the view of CARICOM, the global group of Caribbean nations, that there should be a 2% tax on the income of fossil fuel and petrol manufacturers all down the value chain. Revenue from this would then go towards suffering the impacts of the climate crisis.
Similar to UNGA, the takeaway from this session is that more concrete action on climate finance needs to be taken and can be well summed up by the views of Hon. Ryan Pinder:
‘We all want to be diplomats and be nice to people, and that’s fine and all good but that really doesn’t get you anywhere … we’ve seen that with the results of COP year after year… Diplomacy has an end, and we get tired of talking.’
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