To get back on track to limit global warming to 1.5 degrees Celsius in line with the goals of the Paris Agreement, a profound step up in political commitments and financing is needed, especially for climate action in developing countries being hit hard by the impacts of climate change.
…But this is easier said than done. Multiple barriers exist to scaling up investments in climate action and innovation, ranging from the policy and regulatory environment to technical limitations and investment barriers. These result in a high-risk perception amongst investors and limited access to long-term, affordable financing for climate innovators and entrepreneurs.
This year’s Earth Day highlights the critical need for investing in our planet— to forge partnerships NOW and accelerate the shift towards low emission, climate-resilient development.
The Green Climate Fund (GCF) works across the public and private sectors to break investment barriers and catalyse the much larger amounts of finance needed for transformative adaptation and mitigation programmes in developing countries. GCF does this in four ways.
Establish enabling environment for novel climate solutions
Helping developing countries set up a conducive policy landscape for climate action
GCF supports the designing of integrated climate policies and strategies to enhance efforts of developing countries for climate action. This includes translating Nationally Determined Contributions (NDCs) into detailed financing plans. To achieve this, GCF is leveraging its Readiness Programme to strengthen country ownership and empower national institutions in implementing green development plans.
Fostering climate innovations and start-ups to thrive
GCF pilots new technologies, business models, and practices to establish evidence for the advancement of climate innovations. For example, GCF has invested USD 25 million in the KawiSafi Ventures Fund, which provides growth-stage finance to start-ups investing in off-grid renewable energy technologies in East Africa.
De-risk and mobilise finance at-scale
Bridging gaps in public and private sector financing
GCF de-risks transformative projects to crowd-in private finance, notably for nature-based solutions. For example, GCF’s anchor investment of USD 125 million to the Global Fund for Coral Reefs will mobilise equity from private and institutional investors. This will support programmes that protect coral reefs and stimulate the blue economy across 17 countries.
Strengthen national financial institutions to drive adoption of novel climate solutions
Aligning finance with sustainable development
GCF empowers domestic financial institutions in developing countries to appraise and finance commercially proven climate solutions. For example, GCF through the Inclusive Green Financing Initiative for the Great Green Wall is promoting access to credit and technical assistance to local farmers and banks in the Sahel so they can implement innovative climate solutions.
Addressing these significant innovation and investment barriers now will open opportunities for developing countries to both raise and realise their climate ambitions.
But it is only possible through coordinated action.
Let’s invest in our planet.
Learn more about how GCF is delivering climate solutions
Accelerating and scaling up climate innovation: How the Green Climate Fund’s approach can deliver new climate solutions for developing countries
By Brylle James I. Galang, Communications Assistant Consultant at GCF