How to Mobilize Finance for Ambitious Climate Action: SB60 Stop and Reflect Insights
Improving the flow of and access to climate finance is key to achieving the goals of the Paris Agreement. As countries implement their Nationally Determined Contributions (NDCs), access to climate finance is a critical enabler of ambitious action on climate mitigation and adaptation.
At SB60, the 2024 Bonn Climate Change Conference, the NDC Partnership convened more than 30 countries and development partners to review strategies for mobilizing climate finance. During the “Stop and Reflect Meeting on Mobilizing Finance for Ambitious Climate Action,” participants provided input to enhance the "Climate Investment Planning and Mobilization Framework (CIPMF)," jointly developed by the NDC Partnership and the Green Climate Fund (GCF), and engaged in discussions guided by the "Principles and Recommendations on Access to Climate Finance" from the Taskforce on Access to Climate Finance. The interactive, three-hour event surfaced the following key insights shared by taskforce pioneer countries and development partners:
Enhance country ownership over climate investment planning and mobilization processes. Countries need sustained political will across all levels of government to drive effective climate investment and mobilization. This commitment allows for better alignment and streamlining of climate policy priorities, particularly when leveraging existing platforms and initiatives to avoid duplication of efforts and maximize the impact of climate policies and programs. Effective coordination between ministries of finance and environment also ensures financial resources are allocated efficiently and climate actions align with broader economic and development objectives. Political will and whole-of-government engagement needs to be matched by human resources and capacity readily available at the right times and locations to effectively address emerging needs and challenges.
Align identification and prioritization of investment needs with country priorities. NDCs, National Action Plans (NAPs), Long-Term Low Emissions Development Strategies (LT-LEDS) and development planning documents can foster effective collaboration between country stakeholders and international partners. These established frameworks should serve as the foundational basis for joint efforts, offering a structured approach to addressing climate investment and mobilization requirements. By anchoring engagement in these comprehensive plans, stakeholders can align strategies and resources more effectively.
Use science-based scenario planning to inform investment planning. Ensuring investment needs are grounded in robust, evidence-driven assessments is crucial for achieving the desired climate impacts. Science-based scenario planning enables accurate identification and quantification of resources needed to meet climate objectives and adapt to evolving conditions. This methodical approach allows for more precise and informed decision-making, helping to allocate resources where they are most needed and ensure climate actions are both effective and sustainable.
Shift to programmatic approaches to promote long-term finance solutions. Effective climate finance requires a coordinated approach that aligns various strategies and policies across different sectors and levels of government. Key challenges in this area include defining clear roles and ensuring information is customized to meet the needs of different stakeholders. Greening the financial sector by embedding environmental considerations into financial practices, promoting the use of sustainability-linked bonds and advocating for increased private sector funding for adaptation projects can help to address these challenges. Improved data analysis to better track and manage climate finance can also allow for more informed decision-making and effective resource allocation. These strategies aim to enhance the overall effectiveness of climate finance by fostering better coordination, increasing private sector involvement and ensuring funding is targeted and impactful.
Leverage private sector investments. A combination of structural reforms, enabling environments and refined reporting frameworks can strengthen private sector investment in NDCs. It is important for countries to carefully design a mix of incentives and policy reforms that effectively attract private investment into key sectors identified in NDCs. This includes reviewing and potentially adjusting subsidies to make them more appealing to private investors, thereby enhancing the attractiveness of these sectors and providing clear and consistent policy signals to demonstrate government commitment and ensure regulatory stability. Such signals are vital for creating a favorable investment climate, as they help establish a predictable and secure environment for private investors.
The insights and feedback collected during this "stop and reflect” will enhance ongoing efforts by the NDC Partnership to assist countries and partners in mobilizing finance for ambitious climate action. The next steps in our climate investment planning and mobilization work involve publishing the consolidated CIPMF document and launching the dedicated online platform. These resources will offer decision-makers more comprehensive guidance, best practices and support tools to drive effective climate finance strategies.