What you need to know about climate finance ahead of the One Planet Summit
Two years after that landmark moment when the Paris Agreement was adopted at COP21, the climate spotlight is once again turned towards the French capital for President Macron’s One Planet Summit.
The One Planet Summit takes place on 12 December in Paris, France, co-hosted by Secretary-General of the United Nations Antonio Guterres and President of the World Bank Jim Yong Kim, and will focus on mobilising and directing finance towards low-carbon projects that support and accelerate climate change solutions.
Ahead of the summit, here’s what you need to know about climate finance:
What is climate finance?
While there is not yet an official definition of climate finance, it generally refers to financing that is aimed at reducing greenhouse gas emissions and helping industries and societies transition to a low-carbon future.
Article 2 of the Paris Agreement, referring to the need to strengthen the global response to climate change, includes as a key aim: “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”. Additionally, Article 9 of the Paris Agreement urges developed countries to take the lead in “[mobilising] climate finance from a wide variety of sources, instruments and channels.”
How much climate finance is needed?
According to a 2017 report from the Organisation for Economic Cooperation and Development for the German G20 presidency, US$ 6.3 trillion is needed annually until 2030 to meet global climate goals. So far, governments have committed US$ 100 billion per year from 2020, which means that the private sector will be essential to bridging the climate finance gap.
How can we increase private sector investments?
The private sector has the capacity and the desire to invest in projects to deliver mitigation and adaptation outcomes to meet the global climate objectives.
Garnering sufficient investment from the private sector to meet the climate finance gap requires forward-looking strategies and a positive policy environment, including open and competitive markets, a pipeline of bankable projects, transparent accounting and reporting metrics, and policy interventions to influence the risk/return profile of investments.
In ICC’s 2012 Green Economy Roadmap, 10 high-level conditions are outlined under which private sources of climate finance can best be mobilised. At COP23 in Bonn, Germany this year, ICC released a policy statement that also put forward several recommendations to mobilise climate finance.
The private sector has been moving at an unprecedented level to integrate sustainability into its operations and business models. Growing awareness of climate investment opportunities and the economic threat of non-action mean that greater disclosure of climate risks and carbon footprints will become prerequisites for any successful 21st century business. Common rules and greater transparency over what constitutes a climate-related investment will go a long way to unlocking the full potential of the private sector to spearhead a path towards a low-carbon future.
What should I watch for at the One Planet Summit?
The One Planet Summit will address several important issues in climate change, such as the role of the public and private sectors in mobilising resources, new financing instruments to accelerate progress towards reducing greenhouse gas emissions, and integrating climate considerations into business and investment practices.
Speakers will also discuss how to strengthen policy frameworks and long-term planning to better support and facilitate mitigation and adaption goals. Besides the French President himself, the summit will be attended by a number of key figures, such as the United Nations Framework Convention on Climate Change Executive Secretary Patricia Espinosa, COP23 President and Fijian Prime Minister Frank Bainimarama, UN Secretary-General Nations Antonio Guterres, and World Bank Group President Jim Yong Kim. There will also be a number of CEOs, many of whom are ICC members contributing to the discussions.
As the title of the summit declares, we are all one planet. Faced with a global threat like climate change, it is clear that all stakeholders must come together in collective action. Business is fully committed to the objectives laid out in the Paris Agreement and—with the full potential of private finance on board—has the necessary tools to contribute to reaching our collective global climate goals.