Financing the Road to Resilience and Net-Zero Economies – Talanoa at the Global Climate Summit Affiliate Event
The Fijian COP23 Presidency – together with the Rockefeller Foundation and the Climate Policy Institute – hosted a finance-themed Talanoa on Friday, 14 September, on the margins of the Global Climate Action Summit.
The event will brought together key actors and thought leaders from across the financial system who shared inspirational and thought-provoking stories on what is needed to put the world on a fast-track to net-zero emissions.
Inia Seruiratu, Fiji’s High Level Climate Champion, began the discussion by introducing the Pacific concept of knowledge sharing and storytelling known as “talanoa”. In the context of the Talanoa Dialogue, it is storytelling for a purpose with the ultimate goal of giving political leaders the encouragement, inspiration and ideas they need to revise their nationally determined contributions upwards. Talanoa also provides the opportunity to tell stories and to listen to the stories of others and in the process be inspired by perspectives and insights that may not have been considered before.
The Finance Talanoa discussion was focused around the following questions:
- What approaches have worked, or new approaches could work, to make smaller emerging economies achieve the requisite scale for international investors, including the private sector?
- What can national governments do to increase the global investment into building resiliency for Small Islands and other vulnerable communities?
- What is the key message the COP23 Presidency should deliver to the Ministers in Poland to encourage all Parties to ramp up their ambition?
Participants in the Finance Talanoa shared stories and insights related to climate finance in response to these questions. The following are the key takeaways from the discussion:
- Matchmaking: There is enough capital but a lack of intermediaries and bankable projects and conduits for capital. The funding is flowing but primarily to big markets in big lumps in certain instruments. The challenge is how to bring private capital where it’s needed. Philanthropies have a role to play in bridge building.
- Blended finance: Development capital (Multilateral Development Banks (“MDBs”) and Official Development Assistance) is critical to mobilise private investment through risk mitigation.
- Enabling investment environment: We need to push the MDBs and governments to strengthen the policy environment and provide capacity building. We need to standardize and simplify instruments. We should make data useable to regulators to make more attractive infrastructure investments (e.g., some features of green infrastructure could allow banks/insurers to have lower capital charges). Dysfunction around pricing in the markets needs to be addressed to ensure instruments can function.
- Development bank leadership: MDBs have become too conservative and need to take more risk – they can securitise portfolios and optimise balance sheets to attract institutional investors – this also requires leadership from shareholders. MDBs should not just focus on big projects but should focus on those projects that don’t have access to finance. MDBs should work with local banks and provide derisking to allow local banks to invest and provide concessional finance.
- Scale is critical: Attracting investors to projects in small island developing nations requires an aggregation of small projects, regional approaches, risk mitigation at the fund level and new business models.
- Green infrastructure is an investment opportunity: We need the data to show that “green” isn’t more risky and that investing in sustainable infrastructure in developing countries is an investable asset class.
- Don’t reinvent the wheel: Investors don’t like bespoke and complex structures – e.g. replicate pay for performance structures across sectors (also fits with the importance of investing in land use and forests).
- South-South investment: South-South investments are scaling up, including in infrastructure investment in developing countries. These investment activities could benefit from international lessons learned and best practices for climate resilient infrastructure.
- Resilience and cities: We must focus on resilience (resilient infrastructure assets should attract a lower cost of capital) – we must engage in cities and subnational entities.
- Health implications: Activities that reduce climate impacts often also have significant public health benefits. Focusing more on the health impacts of climate could result in broader support and open new doors for funding for climate actions and appeal to cities and their scope of jurisdiction.
- Incentives for developing and developed countries: We need to create the right incentives for developed countries to help developing nations and show that the cost of non-cooperation is high.
Storytellers and participants:
- Rachel KYTE, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for Al
- Rémy RIOUX, CEO, Agence Française de Développement (AFD)
- Oliver YATES, Macquarie Group
- Emma HOWARD-BOYD, Chair, Environment Agency, United Kingdom
- Christian DESEGLISE, Managing Director, Global Head of Central Banks and Global Co-Sponsor of Sustainable Finance, HSBC
- Vikram WIDGE, Head of Climate and Carbon Finance, International Finance Corporation
- Joaquim LEVY, Managing Director & CIO, World Bank Group
- Krishan DHAWAN, CEO, Shakti Sustainable Energy Foundation
- Kyung-Ah PARK, Head of Environmental Markets, Goldman Sachs
- David GIORDANO, Managing Director, Head of Renewable Power Americas and APAC, BlackRock Real Assets
- Bright NTARE, Program Manager, Fonerwa – Rwanda Environment and Climate Change Fund
- Claudia OCHOA, National Park Service, Peru
- Emma SRI MARTINI, CEO, PTI SMI
- Jonathan TAYLOR, Vice President, European Investment Bank (EIB)
- Peter WHEELER, Executive Vice President, The Nature Conservancy (TNC)
- Bruce SCHLEIN, Vice President of Environmental Affairs, Citi
- Verónica ARIAS, Environment Secretary of Quito, Peru
- Murray BIRT, Vice President, Senior ESG Strategist, Deutsche Bank – DWS
- Nancy PFUND, Founder and Managing Partner, DBL Partners
- Conyers DAVIS, Global Director, USC Schwarzenegger Institute for State and Global Policy
- James GRABERT, Director Sustainable Development Mechanisms, UNFCCC
- Maryke VAN STADEN, Finance Lead, ICLEI
- Karsten SACH, Director General, Climate Policy, European and International Policy Federal Ministry for Environment, Nature Conservation, Building and Nuclear Safety, Germany
- Marilyn WAITE, Hewlett Foundation participant
- Barbara BUCHNER, Executive Director, Climate Finance, Climate Policy Initiative
- Lorenzo BERNASCONI, Associate Director, The Rockefeller Foundation