With $468 trillion in assets across the globe, fully addressing the climate, biodiversity and land degradation crises – in a way that is aligned with commercial objectives – is fully within the reach of financial markets, writes Frannie Leautier, Partner, CEO of SouthBridge Investment.
Mobilizing finance to accelerate climate action and advance the SDGs
As climate impacts intensify, the United Nations Environment Programme Emissions Gap Report 2022: The Closing Window – Climate crisis calls for rapid transformation of societies finds that the world is still falling short of the Paris Agreement climate goals, with no credible pathway to 1.5°C in place. Only an urgent system-wide transformation can avoid an accelerating climate disaster.
Trillions of dollars’ worth of investments are needed each year to achieve the rapid, far-reaching transformations required to address the impact of the climate crisis, and to deliver on the objectives of the United Nations Framework Convention on Climate Change, the goals of the Paris Agreement, and the 2030 Agenda for Sustainable Development. Unlocking access to both public and private climate finance, especially in developing countries, is critical to achieving these.
A significant push is required to meaningfully improve the scale, quality and pace of investment and finance for projects supporting the climate change agenda.
Amongst other things, this push requires the development of impactful projects that prospective financiers, be they public or private, debt or equity, commercial or philanthropic, can coalesce around and support. Building projects, and project pipelines, from concept phase through to investment readiness is a complicated but essential task, and one that potentially requires different sources of funding across the various development stages or life-cycle of projects.
The need to close the adaptation gap is especially acute. Project developers and investors must focus on preparing and investing in projects that build resilience and protect the vulnerable from the negative impacts of climate change; to drive systemic change and innovation for carbon neutral, climate resilient transformation in the context of just transition; and to protect and restore natural capital
In this context and as precursor to COP27, the COP27 Presidency, the five United Nations Regional Commissions, and the UN Climate Change High-Level Champions jointly convened a series of five regional forums between August and October 2022 titled “Climate Initiatives to Accelerate Climate Action and Advance the SDGs”.
The forums were convened to demonstrate that a meaningful pipeline of funding opportunities exists, including importantly across developing countries, and to bring them to the attention of prospective financiers with capital to deploy. Overall, over 450 projects, programs, funds, and enterprises requiring approximately USD $600bn in financing were identified from various sources in the run-up to, during and after the forums. Fifty of these aggregating to approximately USD $90bn in funding requirements will feature as illustrative examples of the opportunities available to prospective financiers in the UN Compendium of Climate-Related Initiatives which the United Nations intends to launch at COP27.
Separately, the Climate Champions’ Extended Compendium of Climate-Related Initiatives has been launched in collaboration with the UN Regional Commissions, totalling over USD $120bn in funding requirements. This longer list includes the 50 projects forming the UN Compendium and supplements them with additional ones derived both from the forums, and third-party platforms. The full list of 450+ projects can be accessed via the Climate Champions Master Project List of Climate-Related Initiatives.
Another practical output from the forums comprises a financing factsheet — a practical tool for project proponents to draw on to collate information that prospective financiers would expect to have to be able to engage meaningfully in funding discussions.
The forums also witnessed constructive discussions amongst a broad community of public and private partners and stakeholders on identifying existing gaps and best practices on accelerating investment in climate projects, and on creating the enabling environments that will hopefully enhance the prospects of these projects achieving financial close and fruition. The Climate Champions’ Assets to Flows report provides a summary of the key insights derived from the series of forums.
The funding opportunities span various themes, namely, agriculture, the Blue Economy, carbon credits, cities, digital, energy, industry, land, transport, and water. To highlight but a few, there is the AFR100 Initiative, the Blue Bond and Debt for Nature Swap, a Green Ammonia production facility, the Caribbean Resilience Fund, the electrification of various public transport systems, the UN Climate Finance Innovation Fund for Women, together with various opportunities designed to enhance building efficiency and protect against floods.
While many of the projects may not yet be mature enough to be financed, early engagement from the private finance sector has been invaluable in building understanding among project proponents on information and elements needed by financiers to engage with them. The private sector should be viewed not merely as a pool of capital, but as a pool of expertise.
The hope is that prospective financiers and investors will review the opportunities presented and engage meaningfully with project sponsors to progress them.
Download/view relevant documents and projects:
- Assets to Flows report
- UN Compendium of Climate-Related Initiatives
- Climate Champions Extended Compendium of Climate-Related Initiatives
- List of Climate Projects
- Fact Sheet to submit your own project
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