Finance ministers, international financial institutions and the financial sector are meeting at COP26 to mobilize global finance for climate action.
Mobilizing finance is essential if we are to deliver the urgent action we need to limit the global temperature rise to 1.5°C. Trillions of dollars of additional investments per year are needed to secure a low-carbon future and support countries already experiencing the devastating effects of climate change.
COP26 President Alok Sharma said:
“Today there is more public and private funding for climate action than ever before.
“But to deliver on the commitments made in the Paris Agreement and keep the 1.5 alive, we need developed countries to secure public finances and unlock the trillions needed for private investment to create a net zero future and protect lives and livelihoods from the devastating effects of climate change.
“This is why we have made finance a major focus of COP26, why these new commitments from nations and the private financial sector are so welcome, and why we continue to press for countries to do more to meet their financial obligations. .
“I am delighted that work is underway to mobilize finance in developing countries to help them with their energy transition. Countries tell us what they need, now global finance must react.”
Meet the $100 billion pledge and fund adaptation
Countries made new pledges to increase funding to help developing countries cope with the impacts of climate change, including a pledge from Norway to triple its funding for adaptation, pledges from Japan and Australia to double their funding for adaptation, and commitments from Switzerland, the United States and Canada for the Adaptation Fund.
This included the largest commitment of U.S. adaptation funding to date, to reduce climate impacts on those most vulnerable to climate change around the world. While Canada has pledged to allocate 40% of its climate finance to adaptation.
New commitments for climate finance have also come from the UK, Spain, Japan, Australia, Norway, Ireland and Luxembourg, which are building on the plan established before the COP26 to provide the 100 billion dollars a year to developing countries.
To combat the difficulties many countries face with bureaucracy in securing climate investments, new funding of £100 million from the UK was announced today to support the Climate Change Task Force approach. Access to Climate Finance, co-chaired by the UK and Fiji.
The task force has launched a partnership with five ‘pioneer countries’ – Bangladesh, Fiji, Jamaica, Rwanda and Uganda – to help them and their local communities get the funding they need to their climate plans.
New commitments are expected in the coming days, particularly on adaptation. The COP will also see the launch of discussions on a new global financial target to replace the $100 billion target from 2025.
Public finances for a net zero future
Demonstrating the direct benefits of what public climate finance can deliver: Leaders from South Africa, the United Kingdom, the United States, France, Germany and the European Union yesterday announced a innovative partnership to support South Africa in an accelerated just energy transition.
As a first step, the international partnership announced that $8.5 billion could be made available over the next 3-5 years to help South Africa – the world’s most carbon-intensive power producer. – achieve the most ambitious emissions reduction target under its modernized and ambitious programme. nationally determined contribution.
Mobilize private financing
Finance ministers also discussed how the billions of dollars in public finance must be used to mobilize the trillions of dollars in private finance needed for a climate-resilient and net-zero future, and how to help countries in development to access this funding.
The United States, the European Commission, and the United Kingdom also committed to working in partnership with countries to support a green and resilient recovery from COVID-19 and boost investment in clean and green infrastructure in developing countries. development.
The UK has also committed £576m to the COP for a set of initiatives to mobilize finance in emerging markets and developing economies, including £66m to expand the UK’s MOBILIST programme, which helps develop new investment products that can be listed on public markets and attract different types of investors.
Initiatives announced by the World Bank Group and the Asian Development Bank will share risk with developing countries and aim to raise up to $8.5 billion in new financing to support climate action and sustainable development . There was also the launch of a new innovative financing mechanism – the Climate Investment Funds Capital Markets Mechanism (CCMM) – which will boost investments in clean energy such as solar and wind power in the developing countries.
Align private financing with net zero
Private financial institutions have also taken an important step to ensure that existing and future investments are aligned with the global goal of net zero emissions.
Thirty-five countries have agreed on mandatory measures to ensure that investors have access to reliable information on climate risks in order to direct their investments towards greener areas. And to ensure common standards, 36 countries have welcomed the announcement of a new international body, the International Sustainability Standards Board (ISSB).
Over $130,000,000,000 in private funding is now committed to science-based net zero targets and short-term milestones, through the Glasgow Financial Alliance for Net Zero, led by Mark Carney.
GFANZ members are required to set strong, science-based short-term goals within 12-18 months of joining, and more than 90 of the founding institutions have already done so. One of GFANZ’s main objectives is to support developing countries and emerging markets.
The UK Chancellor also announced her intention to align the UK’s financial center to net zero. Under the proposals, UK financial institutions and listed companies will now be required to publish net zero transition plans detailing how they will adapt and decarbonise as the UK moves towards a net zero economy. by 2050.