The G20 released two documents that provide support to work related to climate change and the global financial architecture going forward: a policy document by the incoming German presidency and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Green Climate Fund (GCF) Board approved US$315 million for new projects and programmes.
December 2016 also saw the approval of various projects and programmes aimed at advancing climate change adaptation in several developing countries in Asia and Africa.
19 December 2016: During the month of December, the Group of Twenty (G20) released two documents that support work related to climate change and the global financial architecture going forward. The Green Climate Fund (GCF) Board held its 15th meeting and a number of multilateral climate funds received new financing pledges.
In the Paris Agreement on climate change, countries agreed to make “finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development.” Developing countries will receive financial resources for both mitigation and adaptation actions, while developed countries are expected to continue leading in mobilizing climate finance from a variety of sources, with public funds playing a significant role in reaching the previously-agreed US$100 billion annual target by 2020. Monthly SDG Knowledge Hub Climate Finance Updates aim to help track multilateral financing to support the finance goal agreed under the UNFCCC, which will in turn contribute to the implementation of Sustainable Development Goal (SDG) 13 (Take urgent action to combat climate change and its impacts).
Global Institutions Support Work on Linkages between Climate Change and Finance
In December, two documents supporting mainstreaming climate change into the global financial architecture were issued. The German Government, which will preside over the G20 in 2017, launched a document outlining its priorities for the 2017 G20 Summit. Under the theme ‘Building Resilience,’ the document mentions the Group’s intention to “continue the activities on green finance launched under the Chinese Presidency in 2016.” Under ‘Improving Sustainability,’ the document outlines the aim of G20 discussions as “foster[ing] appropriate political frameworks, financing instruments, and economic incentives for investments in climate-resilient infrastructure and to boost technological innovations.” Germany has also announced it would work closely with the World Bank to address the effects of climate change, pledging €105 million to the Bank’s climate change programmes. [German Government G20 2017 Priorities] [UNFCCC Press Release] [IISD RS Mitigation Update]
The Task Force on Climate-related Financial Disclosures (TCFD) launched its draft recommendations for a public consultation that will extend through mid-February 2017. The TCFD was set up in December 2015 by the G20’s Financial Stability Board (FSB) to develop voluntary risk disclosures for companies of their exposure to climate change-related risks. Disclosure of these risks is crucial for directing investments towards a climate-safe future. The document stresses the need for: climate-related financial disclosures in public financial filings; as well as the use of quantitative scenario analyses that take into account the potential impacts of climate-related risks and opportunities, and disclose related assumptions. The recommendations also identify four core elements of climate-related financial disclosures, namely governance, strategy, risk management, and metrics and targets. [UNEP-FI Press Release] [TCFD Website] [TCFD Recommendations Webpage] [IISD RS Story on TCFD Establishment]
Also, starting from 2017, the Food and Agriculture Organization of the UN (FAO) will have a Department of Climate, Biodiversity, Land and Water, which will lead on FAO’s work on climate change. The department was established by the 155th session of the FAO Executive Council, which also announced plans to increase FAO’s support to countries’ climate change assessments through the GCF and other sources. [IISD RS Story on FAO Council]
GCF Board, CIF Trust Fund Committee and Sub-Committees Meet
In other December meetings, the GCF Board held its 15th meeting in Apia, Samoa, and the Climate Investment Funds (CIF) convened a series of meetings in Washingon DC, US.
The GCF Board approved US$315 million for projects and programmes. Of this amount, US$133 million will go to a project by the Inter-American Development Bank (IDB) that aims to catalyze private investment in sustainable energy in Argentina, and US$58 million to a UN Development Programme (UNDP) project to enhance climate resilience in Samoa through integrated flood management. The GCF Board also accredited seven new entities, including five direct access entities, and elected Ewen McDonald (Australia) and Ayman Shasly (Saudi Arabia) as its Co-Chairs for 2017. [GCF Press Release on Board Meeting] [GCF Press Release on XacBank Accreditation] [GCF Board Meeting On-demand Webcast] [GCF Board Meeting Documents Webpage]
The GCF Board approved US$315 million for projects and programmes, accredited seven new entities, and elected its Co-Chairs for 2017.
The CIF Clean Technology Fund (CTF) Trust Fund Committee and three CIF Sub-Committees convened to consider periodic operational and results reports, and decide on policies going forward. [CIF Meetings Documents Webpage] [CIF Meetings Agenda]
LDCF and Adaptation Fund Receive Pledges from Belgium, ADF Closes 14th Replenishment
A number of large climate financing announcements concentrated around the UN Marrakech Climate Change Conference in November. But December 2016 also saw various multilateral financing pledges by donors and agreements with partner countries.
Two major announcements came from Belgium: a €7 million pledge to the Least Developed Countries Fund (LDCF) from the Government of Belgium; and €2.5 million to the Adaptation Fund from the Brussels Regional Government. The latter announcement raised the Adaptation Fund’s pledged contributions for 2016 to approximately US$84 million, which is US$4 million above its mobilization target. [GEF Press Release on Belgian Funding to LDCF] [Adaptation Fund Press Release on Brussels Funding]
Also in December, the African Development Fund (ADF), a concessional window of the African Development Bank (AfDB), raised a total US$7.06 billion in pledges from donors for the next three years to support 38 lower-income African countries, including in the area of climate change and gender, which is one of AfDB’s five key priority areas. [AfDB Press Release]
Climate-smart Agriculture, Risk Resilience Get a Boost
In December, multilateral development banks (MDBs) and other development funds reported on financing for projects and programmes aimed at advancing climate change adaptation in several developing countries in Asia and Africa.
In Ethiopia, more than 100,000 poor rural households are expected to benefit from a US$145 million programme of the International Fund for Agricultural Development (IFAD) aimed at supporting smallholder farmers to adapt to climate change through the implementation of small-scale irrigation schemes. [IFAD Press Release]
In Viet Nam, the World Bank’s International Finance Corporation (IFC) and Canada will support the Loc Troi Group, a local agricultural services and products provider, in conforming to agricultural standards and practices developed by the Sustainable Rice Platform (SRP), a multi-stakeholder platform co-convened by the UN Environmental Programme (UNEP or UN Environment) and the International Rice Research Institute. Overall, the project aims to improve agricultural competitiveness while applying climate-smart practices. [IFC Press Release]
In the area of disaster risk and climate change resilience, three agreements were announced in December. In the Chinese city of Xinyu, a US$150 million loan from the Asian Development Bank (ADB) will support a project to enhance environmental risk resilience through infrastructure projects, planning and regulation, as well as climate change and water quality monitoring. In the Lao People’s Democratic Republic (PDR), a US$25 million credit from the International Development Association (IDA) will go towards strengthening road maintenance systems and road connectivity in line with the country’s national programme to build climate-resilient infrastructure. In the Cook Islands, a US$10 million policy-based loan from the ADB will provide contingency funding for short-term post-disaster financing needs. [ADB Press Release on China] [World Bank Press Release on Lao PDR] [ADB Press Release on Cook Islands]
Lessons from Climate Resilience and Disaster Responses
Adaptation was also the focus of a number of reports. On lessons from supporting developing countries with climate resilience and disaster responses, the CIF published an article detailing how Niger, the world’s poorest country, has integrated climate-resilient growth and poverty reduction with support from the CIF Pilot Programme for Climate Resilience (PPCR), including through programmes aimed at achieving food and water security, and improving weather and climate information. [CIF Article on Niger]
Devex reported on recovery efforts in Viet Nam, which is recovering from its worst drought in nearly 100 years, identifying four lessons: slow onset disasters are more difficult to respond to; politics play a role when governments consider requesting for monetary support; there is a need to shift focus to higher-value, climate-tolerant crops; and sustained focus on climate change adaptation is paramount. [Devex Article on Viet Nam]
Although most of the funding news reported in this Update targets adaptation action, one development related to low-carbon logistics. In Ukraine, Meest Express, a local postal and logistic services provider, will receive a loan of up to US$1.8 million under the European Bank for Reconstruction and Development (EBRD) and the Global Environment Facility’s (GEF) Green Logistics Programme (GLP), aimed at introducing logistical innovations and low-carbon courier products. The support is part of a US$10 million loan package from EBDR to support Meest Express’ expansion in the local market. [EBRD Press Release]
December Reading List
Recommended climate finance-related publications from the month of December include:
- A report by the AfDB, titled ‘Transitioning from INDCs to NDCs in Africa,’ which finds that “support in preparing funding proposals will help alleviate a major impediment to operationalizing mitigation commitments, empowering governments to view climate finance as an accessible and reliable vehicle to mobilize future infrastructure and development investments.” [AfDB Press Release]
- An International Monetary Fund (IMF) staff paper that explores how the IMF “can help meet the evolving needs of small states facing risks from natural disasters and climate change.” [IMF Policy Paper Small States’ Resilience to Natural Disasters and Climate Change]
- An information brief by the IFC on the growth of the global green bond market. [IFC Brief Green Bonds and Beyond]
- A guide for policy makers by the Climate Policy Initiative (CPI) on ‘Green Bonds for Cities’ in developing countries. [CPI Guide Green Bonds for Cities]
- Two reports by ClimateWise, a network of 29 insurance industry organizations, on ‘Investing for Resilience’ (focusing how the insurance industry can support redirecting capital flows into climate resilience-enhancing investments) and reviewing the ClimateWise members’ adherence to the network’s principles. [ClimateWise Press Release]
- The Nordic Environment Finance Corporation’s (NECFO) new strategy, under which the corporation will “focus on promoting green growth and preventing climate change by supporting Nordic investments in environmentally sustainable solutions both in the private and the public sector.” [NEFCO Press Release]
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The SDG Knowledge Hub publishes monthly climate finance updates that focus on news and reports on projects and other finance-related developments by MDBs and key climate finance-related institutions. Past Climate Finance Updates can be found under the tag: Finance Update: Climate Change. Climate finance news and developments relating to renewable energy and energy efficiency are published in monthly Sustainable Energy Finance Updates, which can be found under the tag: Finance Update: Sustainable Energy