Financing for Climate and Development

For a year and a half, representatives from the real economy, the financial sector, academia and civil society fought hard to reach an agreement on how Germany could become a prime hub for sustainable finance . On February 25, the final report of the German government's Sustainable Finance Advisory Council (SFB) was published, with ambitious recommendations on how to make the financial market more sustainable: Shifting the Trillions - A Sustainable Financial System to facilitate the Great Transformation. It is now the government's turn to translate the recommendations into an effective strategy and initiate the first legislative changes before the end of this legislative term.

The Paris Agreement sets out the ambitious task of aligning all financial flows with its goals to avoid the worst impacts of warming. Multilateral Development Banks (MDBs) have an important role to play in making this goal a reality.

The Paris Agreement sets out the ambitious task of aligning all financial flows with its goals to avoid the worst impacts of warming. Multilateral Development Banks (MDBs) have an important role to play in making this goal a reality. Their development mandates, technical expertise, and track record on climate finance mean that MDBs can lead the way by helping developing countries avoid fossil fuel-intensive development pathways, by developing the necessary standards and investment criteria to assess the alignment of investments with the Paris Agreement’s goals, and by helping to mobilise increased volumes of climate finance.

82% of the G20’s energy supply still comes from fossil fuels, according to the 2018 Brown to Green Report, released today. In Saudi Arabia, Australia and Japan fossil fuels make up even more than 90% of the energy supply, with little or no change in recent years. The 20 major economies play a key role for achieving the Paris targets because they alone account for 80% of global greenhouse gas emissions.

In this paper, we explore the Fund’s role in the future climate finance architecture, taking into account past and current debates in international climate negotiations. The paper also seeks to inform these debates, particularly discussions related to operating modalities, safeguards, and governance of the Adaptation Fund.

The Green Climate Fund (GCF) has the ambition to become the most important multilateral instrument in climate finance. Africa has become a focus region for the GCF early on. As it is unlikely that the intended paradigm shift towards low-carbon emissions and climate-resilient economies and societies (GCF founding mandate) can be achieved without broad civil society (CS) engagement, it is essential to scale-up existing civil society capacities to advocate for ambitious proposals, bring on-the-ground expertise to the table, help embed GCF-funded activities in a broader societal support for transformation and increase accountability of national authorities.

In the landmark Paris Climate Agreement, the international community committed to limit global warming to well below 2°C, if not 1.5°C above preindustrial levels. World leaders also committed to foster adaptation and to make all financial flows consistent with climate resilient, low greenhouse gas development. The G20 as group of the leading industrial nations and emerging economies, being responsible for 80% of global greenhouse gas emissions, provides an important platform for joint action towards implementing the Paris Agreement.

The climate vulnerable forum (CVF), now uniting 49 of the world’s countries most vulnerable to climate change, has again taken centre-stage in the fight against global warming and for an equitable international climate regime. At the recent IMF and World Bank spring meeting in Washington, the finance ministers of the group, the Vulnerable 20 (V20), met with representatives of its “big brother”, the G20, to discuss issues related to climate finance, effective mitigation policies, support for adaptation and resilience and above all: enhanced cooperation.