Climate finance continues to be one of the biggest unresolved issues in global political negotiations. Ahead of last year’s UN climate change conference (COP26), climate finance was seen as the biggest challenge facing lawmakers – although some progress has been made, communities facing the impacts of climate change wanted more at the end of the summit. With the news that COP27 will aim to make significant progress on climate finance, there is hope that critical projects can receive much-needed funding – but communities shouldn’t be entirely dependent on funding audience.
SEARCH FOR NEW FUNDING
Private finance through specialized institutions, NGOs or philanthropic organizations emerged as a legitimate provider of climate finance at COP26 and continued to provide much-needed economic support to sustainability programs. A recent report from the World Economic Forum points out that emerging markets need nearly $95 trillion to transition to a net-zero carbon economy, a price that explains the lack of movement by major economies to support countries’ transition. in development. There is clearly a gap between supply and demand for funding and, as identified by the Caribbean Climate-Smart Accelerator, the private sector is increasingly interested in improving the resilience of frontline communities. in the face of the climate crisis.
“Encouraging investment in emerging markets can be challenging,” says Bill Withers, Group Chief Executive of Standard Chartered Bank, “Of the $94.8 trillion needed, there is an estimated $83 trillion opportunity. dollars for private investors The world’s top 300 investment firms, with total assets under management of more than $50 trillion, have only 2%, 3% and East, Africa and South America Encouraging more private investment could help emerging markets make the transition while increasing growth If investors help finance a just transition, household consumption in emerging markets could increase by up to 4.5% on average each year by 2060, with emerging market GDP rising by 3.1% on average each year over the same period.
This means that private finance would not only provide the necessary resilience building in emerging economies, but also lead to long-term growth. Combined with funding from public sources, such as that discussed at COP26 and the upcoming COP27 or through other multilateral agreements, this can ensure that island communities adapt to climate change. Adaptation is beyond a matter of survival or in the best interest of the region, but it also avoids the medium-term consequence of additional economic and climate migrants seeking refuge in the developed world if their home country becomes uninhabitable.
FUNDING AND COLLABORATION
While innovative opportunities are available to fund the solutions needed by our communities, two critical elements are missing for their implementation: patient external philanthropic capital and collaboration that leads to the creation of economies of scale in the region. We need transparency and visibility in global climate finance and greater collaboration at all levels – local, regional and international. There needs to be more communication and collaboration between stakeholders, including philanthropists.
The Caribbean offers a range of opportunities to create the world’s first climate-smart zone, including the single Caribbean energy export market, developments within the blue economy or cutting-edge innovations – the region is well placed to be a model for future sustainable development. While this is a future we must create for ourselves, it is also a future whose primary beneficiaries must be the region that bears the burden without the financial benefit of the industrial revolution. We need to train ourselves to capitalize on the opportunities that present themselves.
None of us have the luxury of waiting for the annual UN climate summits, especially the Caribbean communities, to determine the amount of financial assistance that will be made available. The long-running international negotiations are complex as the effects of climate change continue to impact the 44 million people living in the Caribbean – we must act ourselves, and we must do it now. Discussions held at the Caribbean Renewable Energy Forum (CREF), the Caribbean Investment Forum (CIF) and the Global Business Forum (GBF) foster collaboration within the region and with other international organizations.
PRIVATE SECTOR-LED CHANGE
These events demonstrate the willingness of decision-makers to find sustainable local solutions and encourage innovative financing opportunities from the private sector, but challenges remain. Building the resilience of our communities is a long-term investment. The private sector is available to invest when projects are properly prepared and can generate a commercial return. What we need is external capital to reduce risk, prepare and make projects more commercially attractive to local investors. Caribbean innovation will lead the region to become the world’s first climate-smart zone, but we need more collaboration and more patient, risk-tolerant external capital to fund the transition. We need more support that is less opportunistic but more focused on our growth and development and the long-term benefits of the region – from the grassroots to the highest levels of government, we need to collaborate more frequently and more effectively.
Racquel Moses is the CEO of Caribbean Climate-Smart Accelerator. Send your comments to firstname.lastname@example.org.