19 December 2017: The One Planet Summit brought together hundreds of global leaders from the public and private sector, including Heads of State and Government, and global CEOs, united in their commitment to step up action to tackle climate change, including through ensuring that climate issues are central to the finance sector. A broad range of ambitious commitments were announced, including several falling under the banner of climate mitigation finance. Initiatives have also been forthcoming this month in the fields of energy efficiency, renewable energy and sustainable infrastructure development, including in the residential sector and and cities.

MDBs and Financial Actors Step up Commitment to Align Financial Flows with the Paris Agreement

Several announcements of note in the field of climate mitigation finance were made at the One Planet Summit, which took place in Paris on 12 December 2017, the two-year anniversary of the adoption of the Paris Agreement. [One Planet Summit: The 12 Commitments]

The International Development Finance Club (IDFC) and its 23 national and regional development bank members signed a joint declaration with multilateral development banks (MDBs) to increase financing dedicated to the implementation of the Paris Agreement, and to take other measures to increase alignment of financial flows with the Agreement, including to: further embed climate change considerations within their strategies and activities; redirect financial flows to support transitions towards low-carbon and climate-resilient sustainable development; support the implementation of national contributions and preparation of long-term decarbonized trajectories by 2050; promote the reduction of greenhouse gas (GHG) emissions, including through putting in place more explicit policies to significantly reduce reliance on fossil fuels; and rapidly accelerate financing for renewables. [European Bank for Restructuring and Development (EBRD) Press Release][ADB Press Release]

The World Bank Group made several announcements, including commitments to end funding for upstream oil and gas after 2019; and to update its target of ensuring 28% of its lending goes to climate action by 2020 by committing to new targets beyond 2020 at COP 24 in Poland in 2018, in line with expectations that countries will submit updated and more ambitious NDCs at COP 24. The Bank further announced plans to invest US$325 million in the largest ever green bond fund dedicated to emerging markets; and to begin reporting annually on GHG emissions from the investment projects it finances in key emissions-producing sectors staring in 2018. [World Bank Press Release]

The Climate Action 100+ Coalition of institutional investors will encourage high-emitting companies to implement recommendations on climate-related financial disclosure.

Several actors committed to aligning financial flows with the Paris Agreement through better disclosure of climate-related risks. France, Sweden and the UK, alongside over 200 businesses announced their support to the implementation of the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD). A coalition of 225 major institutional investors representing more than $26 trillion in managed assets was also launched. The ‘Climate Action 100+‘ Coalition aims to coordinate investors activities regarding the 100 highest-emitting public companies in order to encourage the implementation of the TCFD recommendations and the development of emission-reduction strategies compatible with the goals of the Paris Agreement. [One Planet Summit: The 12 Commitments].

Investing in Sustainable Cities

A further initiative at the One Planet Summit came from the EBRD and the Global Covenant of Mayors for Climate and Energy (GCoM), who together launched an initiative to increase the speed and delivery of finance and support for climate action in cities. The Green Cities Climate Finance Accelerator aims to drive climate action in up to 60 cities, some of which have not received climate finance to date. The Accelerator aims to leverage additional financing from third parties for the development and implementation of city climate plans and projects totaling US$1 billion, following “first mover” financing of US$500 million from the EBRD. [EBRD Press Release]

Under the Global Environment Facility’s (GEF) Sustainable Cities Pilot project, the Government of Mexico and the IDB have partnered to invest in climate change mitigation and adaptation in three Mexican cities, Xalapa, La Paz and Campeche. The US$13.7 million grant will be invested in activities aimed at GHG) emissions through improving solid waste treatment and installing photovoltaic solar energy plants, among others. [IDB Press Release]

Sustainable Infrastructure Investments Take Shape in Europe and Latin America

The European Investment Bank (EIB) alongside Polish Bank Gospodarstwa Krajowego (BGK), the French Caisse des Dépôts Group (CDC), the Italian Cassa depositi e prestiti (CDP), the German Kreditanstalt für Wiederaufbau (KfW) and the Spanish Instituto de Crédito Oficial (ICO), have launched a 10-year, €700 million pan-European infrastructure fund, which will continue the work of the 2020 European Fund for Energy, Climate Change and Infrastructure, also know as the “Maguerite Fund.” Maguerite II aims to catalyze investments in renewables, energy, transport and digital infrastructure, contributing to the successful implementation of key European Union (EU) policies, including in climate change and energy security. [EIB Press Release]

IDB Invest, the private sector arm of the Inter-American Development Bank (IDB) Group, and the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS), have undertaken a new partnership to accelerate sustainable infrastructure development in Latin America and the Caribbean. Involving an initial £177 million contribution from the UK Government, the UK Sustainable Infrastructure Program (SIP) is expected to catalyze private sector investment to contribute to the implementation of the Nationally Determined Contributions (NDCs) under the Paris Agreement in the region. [IDB Press Release]

Residential Sector and Energy Efficiency Boosts

Private bank Barclays has issued a €500 million green bond to refinance mortgages on residential properties that are ranked within the top 15% of lowest carbon intensive buildings in the UK. Maturing in 2023, the bond will benefit properties that have been identified using Energy Performance Certificate (EPC) data provided by the UK Government in 2017. [Climate Action Programme News]

The EBRD has announced a partnership with UniCredit Romania to support energy efficiency investments in the residential sector in Romania, through a loan of up to €45 million (RON 206 million). The loan to UniCredit Bank Romania SA and UniCredit Consumer Financing IFN SA will be on-lent to individuals looking to improve the energy efficiency of their households aiming to expand the availability of green solutions in the residential sector. [EBRD Press Release]