Gaia, together with NewClimate Institute and Stockholm Environment Institute (SEI), has analysed the opportunities and approaches Nordic actors can play in stepping up to the massive finance challenge of the Paris climate agreement.
If the agreement’s goal to limit the average global temperature increase to “well below 2° C” is to be met, all financial flows need to shift dramatically and rapidly from current investment patterns to 2° C compatible pathways. This has major implications for finance institutions, actors and asset owners globally, nationally and locally – both public and private, says Leading Consultant Mikko Halonen from Gaia.
The study highlights a number of Nordic strengths and success studies, Nordic actors and institutions, both public and private, as well as a variety of instruments and approaches that can help deliver on the wider objectives of the Paris Agreement.
NO NEED OR TIME TO REINVENT WHEELS
It is important to recognize that the barriers for mobilizing finance for climate action in developing countries are not always specific to climate-related investments. Many apply to development finance and mainstream finance more broadly. Hence, if we manage to successfully address barriers to climate-related investments, we will most likely also be able to mobilize additional finance for broader SDG activities.
The study identifies four key areas where joint “Nordic solutions” could help address such barriers and mobilize required finance, including
a) investment facilitation through de-risking,
b) enhancing the bankability of climate projects,
c) improving the conduciveness of policies for climate compatible investments, and
d) outlining clearer, prioritized investment plans for developing countries in line with long term climate policy goals.
GETTING ALL HANDS ON DECK – AND IN THE RIGHT PLACES
The study outlines a roadmap that can serve as guidance for joint Nordic action during the next five to ten years. While it includes components of “climate related ODA” as well as contributions from and roles for the “private and finance sector”, the focus of the proposed roadmap lies on the crucial bridging and dialogue between key actors in order to achieve the mobilization of climate finance take place at required scale and pace.
In order to operationalize the roadmap, the study proposes a number of steps for immediate action in 2017-2018. It also suggests a number of key stakeholders and proposes shares of responsibilities to drive action at required pace and scale. Specifically, the study recommends that Nordic countries should:
- Accelerate their joint efforts to help developing countries turn their NDCs into well-grounded investment programmes for climate compatible development;
- Look for opportunities to strengthen joint Nordic finance institutions (NIB, NEFCO and NDF), through increased collaboration;
- Consider the option of establishing a Nordic Climate Investment Fund with a particular view to accelerate climate finance mobilization by institutional investors and promote overall investment alignment with “well below 2-degree investment criteria”;
- Remain a forerunner in the further development of green bonds, looking for ways to expand the market while safeguarding their environmental integrity;
- Assess the early lessons learned and the applicability of climate related finance sector regulation in Nordic countries, as introduced in France and noted in the recommendations provided by the Financial Stability Board (FSB);
- Make use of their “joint voice”, ensuring that sufficient effort and finance is targeted at adaptation and the most vulnerable parties, and that private finance enabling approaches and business models are made available for resilience building;
- Continue to emphasise climate mainstreaming efforts, so that mainstreaming concretely and effectively serves climate finance mobilization and action, the development sector actively takes account of climate change risks and opportunities, and mainstreaming contributes to international efforts on climate finance tracking and transparency.
- Report: Mobilizing climate finance flows: Nordic approaches and opportunities
- Mikko Halonen, Leading consultant, +358 40 700 2190, Gaia Consulting Oy, firstname.lastname@example.org
- Pasi Rinne, Chairman of the Board, +358 400 464 127, Gaia Consulting Oy, email@example.com
- Aaron Atteridge, Stockholm Environment Institute, +46 73 707 8562 , firstname.lastname@example.org
- Frauke Röser, NewClimate Institute, +49 30 208 492 741, email@example.com