Oceans and the Blue Economy have an enormous role to play in preserving and enhancing sustainable economic growth, promoting regional stability and conserving global biodiversity.
Coral reef ecosystems are critical in providing safety, food security and livelihoods to more than 1 billion people.
Twenty years ago, we thought there would need to be an increase in average global warming of up to 4 degrees Celsius to wipe out Coral Reefs. Today we fear this could happen with an average global temperature increase of less than 2 degrees Celsius.
The signs of serious coral reef degradation are already apparent. The Sixth Status of Corals of the World: 2020 Report, released in October and funded by UNEP, has found that between 2009 and 2018, the continuous rise in sea temperature cost the world 14 per cent of its coral reefs – that’s more than the size of Australia’s reefs combined.
That’s why it is so urgent to ramp up investment in coastal and marine ecosystems protection.
But a key barrier in doing this is how to find new sources of investment.
GCF’s growing climate finance portfolio as the world’s largest dedicated climate fund, with currently USD 10 billion in investments which stretches to USD 37 billion when accounting for co-financing, allows us to focus increasingly more on supporting nature-based climate solutions.
Close to half of GCF funds (48%) is allocated for adaptation while 52% is for mitigation, reflecting GCF’s mandate for a balanced allocation of resources in adaptation and mitigation.
But considering the trillions necessary to fund global climate action, there is a limitation to how far public finances can be stretched.
In sourcing the necessary funds, it is essential that we bridge the gap between public and private investors – with innovative investments and financial instruments.
Only in this way can we resolve the climate finance paradox in order to direct the necessary trillions of dollars of finance flows to fund developing country climate action.
Using limited funds to catalyse much larger financial flows, turning hundreds of millions into billions and billions into trillions. Creating transformation at the scale needed to have maximum impact.
To do this, GCF’s transformative approach works by doing four key things.
- Promoting enabling environment climate action
- Mobilising finance at scale
- Accelerating climate innovation
- Aligning finance with sustainable development Many of these measures are focused on nature-based solutions.
On the first prong, promoting enabling environment for climate action, we are helping nurture a supportive regulatory environment and public support in developing countries.
In response to the COVID-19 economic shock, we are leveraging our Readiness resources to assist developing countries design green, climate resilient economic stimulus measures and explore innovative financing instruments to finance them without increasing their debt burden.
I am pleased to tell you about a way we are mobilising finance at scale in a programme specifically targeting coral reef protection.
GCF’s first at-scale private sector programme in the blue economy, the Global Fund for Coral Reefs Investment Window - implemented with Pegasus Capital Advisors - will create a private equity fund to encourage investments in the blue economy, protecting coral reefs.
Targeting 17 countries in Africa, the Asia-Pacific, Latin America and the Caribbean it will address critical financing and private investment barriers centred around the blue economy. It includes 6 SIDS and 2 LDCs.
GCF is an anchor investor with a USD 125 million investment – to catalyse further public and private sector investment across the blue economy.
This project is an example of major financial innovation – the first of its kind in the world. A public-private partnership model with grant assistance being provided to develop early- stage ideas with technical assistance and policy support – the grant window.
Combined with the grant window which you will hear more about today, the investment window removes barriers to private sector investment – to catalyse private sector investment in oceans and the blue economy.
This is an example of the unique value GCF brings and the role we play in generating far greater and long-lasting revenue sources than can be sourced from public finance alone to create not only a new blue economy, but innovative solutions across the whole gamut of sectors driving climate action.
We have an increasing ability to mobilise private finance to deploy new climate
solutions at scale, including those that incorporate nature-based solutions. GCF is investing USD 150 million of first-loss equity into the Global Sub-national Climate Fund, which will de- risk private sector climate investments at the critical sub-national levels. Almost half of the 42 participating countries are LDCs and SIDS.
Our work in accelerating climate innovation includes our support of a pilot incubator and accelerator approach to provide seed capital and incubation services for local green technopreneurs in Asia. Working with the Korean Development Bank (KDB) and the Global
Green Growth Initiative (GGGI), GCF finances are helping to close the gap between initial seed-funding and longer-term, more conventional financing.
And finally, we are aligning finance with sustainable development by strengthening domestic financial institutions to support the widespread adoption of commercially proven new climate solutions.
We are working with Jamaica to establish the first Caribbean exchange for green bonds to finance net zero, climate resilient infrastructure in the Caribbean region.
You may have heard from Barbados Prime Minister Mia Mottley at the GCF event on Tuesday “Catalysing climate investments in developing countries in the context of COVID- 19” on Tuesday how climate effects, including the spread of noxious algae blooms spreading across this SIDS shorelines, and I quote, “daily eating away at our capacity to survive.”
I am pleased that we have been able to work so closely with Barbados to help preserve some of the world’s most beautiful coral reefs, especially as 75% of this SIDS’ inshore reefs are now threatened.
I sincerely thank PM Mottley for her comment that GCF is an “essential part of the international financial landscape that we need in order to make progress.”
I can assure all those here today that GCF will continue to prioritise SIDS, as well as those countries most vulnerable to climate change including LDCs and African States.
This includes generating new forms of finance so that future generations will be able to see coral reefs and the amazing ecosystems which they support and which could never reproduced if lost.
Let’s seize the opportunities here in Glasgow – to drive forward innovative solutions by working together in new ways.
See GCF news update on this event here.