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GCF private sector conference makes business case to lower planet’s climate costs

Songdo,
“Business cannot succeed on a planet that fails.”

This was how the Green Climate Fund’s Executive Director Yannick Glemarec articulated his call for enhanced business action to tackle the climate crisis during the Fund’s second global gathering focusing on the private sector.

The three-day Private Investment for Climate Conference wound up yesterday in Incheon, the Republic of Korea, with a clear message for businesses and other financial institutions to embrace the risks and opportunities posed by climate change.

Participants from over 100 countries gathered to explore how to tap the acumen of the business world and the power of profits to drive new trends in sustainable development. A key focus of the conference was exploring how to break through market barriers which currently mean that only a small fraction of more than USD 210 trillion of private sector assets is funnelled towards climate action.

“Businesses cannot afford to be passive about climate change,” said Mr Glemarec. “Because ultimately all investment will be impacted by climate risk.” While warning that untrammelled climate change “endangers the security and economic livelihoods of hundreds of billions of people,” the Green Climate Fund (GCF) Executive Director spoke positively about the business chances that will accompany the emergence of a low-carbon, climate-resilient global economy.

“The imperative to tackle climate action offers attractive investment opportunities in climate solutions including renewable energy, low-carbon cities, energy efficiency, sustainable transport and climate smart agriculture,” he said.

Former UN Secretary General Ban Ki-Moon echoed Mr Glemarec’s call for greater business investment, especially in financing the fortification of countries and communities to better deal with the climate challenge.

“The threat of climate change is too big, too grave, too serious, and too urgent to delegate to governments and public institutions alone,” said Mr Ban, who is president of the Global Green Growth Institute – which, like GCF, is also based in the Republic of Korea. “Considering how urgently we are behind already in the struggle against climate change, we should be leveraging all of the available and scalable solutions, resources and technologies without delay.”

Emphasising the need to step up climate action, Mr Ban said the world is only months away from the start of a pledge by 2020 to jointly mobilise USD 100 billion of climate finance a year to developing countries. He called on governments and businesses to step up their cooperation in removing climate investment barriers – including political uncertainties and technological risks.

The conference recognised that private sector-led climate finance is blocked by barriers in translating climate initiatives into bankable projects. A number of participants said that enhanced transparency is essential in identifying portfolio profiles and directing the flow of funding pipelines to meet climate financing needs. This includes developing synergies of climate action taken by governments and businesses. 

Jamaica’s Prime Minister Andrew Holness highlighted the need for enhanced cooperation between public and private sectors to ramp up investment in climate resilience, against the backdrop of devastating storms which have swept through the Caribbean in recent years.

“In the face of dire warnings and fearsome extreme events, the push to invest in climate solutions may sound to many in the private sector like a plea for charity,” he said. “But the financial sector must recognise that investing in adaptation now is imperative from the perspective of risk management, but it is also perhaps the biggest investment opportunity of this generation.”

In a sign that his Small Island Developing State (SIDS) is taking domestic action to shore up the private sector’s role in driving domestic climate action, Mr Holness announced his country will list the Caribbean region’s first green bond on its national stock exchange.  The prime minister cited GCF’s capacity building support through its readiness programme as key to the development of the green bond.

Other conference keynote speakers included MUFG Bank’s Managing Executive Officer Randall Chafetz and Danmarks Nationalbank Governor Per Callesen.

The conference focused on a number of key areas seen as vital in increasing the private sector’s role in addressing the increasingly urgent need to finance climate action across the globe. This included how to tap the trillions of dollars held by institutional investors, overcoming market barriers, expanding the reach of climate bonds, and drawing in debt and equity to drive a green transition.

A common theme of discussion during the conference was that partnerships are key to enhancing climate action, and that investors need to be able to see a roadmap leading to a zero-carbon and climate-resilient future. GCF and other actors in the climate finance space need to move financial flows as quickly as possible to private investors with specialist knowledge of different sectors. Participants heard that GCF can help to smooth the bumps of investment as it is uniquely positioned to support financial deal flows and unlock leadership capital for climate in developing countries.

Mr Glemarec told the conference participants that GCF wants to increase its support for private sector-driven climate initiatives amid positive signs that GCF is progressing in its own efforts to recharge its coffers. He said contributions during GCF’s first replenishment this year so far total more than USD 7.4 billion. The world’s largest dedicated climate fund is seeking further support for its mandate to drive paradigm-shifting climate action in developing countries at the GCF pledging conference in Paris on 24 and 25 October.