By David Rossati Debt and Green Transition blog series
Several commentaries on the latest climate negotiations at the UN hailed the creation of a new international climate fund as a historic breakthrough. Unlike other climate funds, this entity will manage a new stream of funding dedicated to ‘loss and damage’ faced by vulnerable countries. Within the realm of the Paris Agreement and the UN Framework Convention on Climate Change (UNFCCC), ‘loss and damage’ loosely refers to the economic and non-economic losses faced by vulnerable countries due to extreme and slow onset events triggered by climate change, such as heatwaves or sea level rise. In other words, loss and damage is a multilateral stream of law and policy, in addition to mitigation, adaptation, and finance which deals with some crucial and unsolved tensions of the so called ‘green transition’: those between industrialized countries and historical polluters on one side, and, on the other, the most vulnerable countries suffering the most from destructive climatic events to which they have contributed little or nothing.
Continue reading “Managerialism versus Climate Justice in financing Loss and Damage”
By Giedre Jokubauskaite / Debt and Green Transition blog series
The private sector has arguably caught up with an urgency of climate transition. This is visible from various climate initiatives that feature banks, insurers, consultancies, multinational corporations, and many others. The idea of ‘mobilising private investment’ for climate transition has also been an essential part of an increasingly popular policy discourse about how to finance green transition. The framing of private investments as key to the transition happens in two steps: firstly, articulating ‘a gap’ of finance needed to achieve climate objectives, and secondly, concluding that only the private sector, with support of the public sector in de-risking and incentive provision, can fill such a gap. Daniela Gabor aptly calls the systemic logic of this narrative the ‘Wall Street Consensus’. However, the privatization of a sector with the key support of public funds is not new: it has originally been applied to funding sustainable development, and now been revamped for policies on ‘green’ transition.
Continue reading “Who benefits from mobilising private sector investment for climate transition?”
By Héctor Herrera / Debt and Green Transition blog series
Over the last few years, two parallel processes have unfolded in Latin America and the Caribbean (LAC). They are seldom considered together, but must be analyzed as intersecting: the drafting and implementation of the Escazú Agreement on environmental participation, and the expansion of the green bond market. I argue that green bonds, debt securities labeled as climate-environment-related and issued to borrow money from the financial market, need to be analyzed in combination with the Escazú Agreement, and with adequate policy action. Likewise, before any other climate finance instruments are tested, a legal and financial infrastructure should be set up to guarantee the basic protections reiterated by the Escazú Agreement: respect for the life and integrity of environmental defenders, access to environmental information, effective environmental participation, and access to justice in environmental matters.
Continue reading “Green Finance under the Escazu Agreement”
By Stephanie Garciduenas Nieto / Debt and Green Transition blog series
As the preferred ‘green’ financial instrument to fund the green transitionGreen Bonds (GB) have become leaders of the market, with S&P Global forecasting a 1$ trillion issuance for 2023 alone. Nonetheless, the green bond market continues to face criticism about greenwashing, lack of a common green definition for projects, transparency, and metrics to define what is ‘green’. Hence, there are key questions to ask about the way in which a bond becomes ‘green’, such as how a bond obtains its green label or certification and who can wield the power to assert the qualifying title.
Continue reading “Who decides what is ‘green’ enough to be ‘green’?”
By Patrick Bigger / Debt and Green Transition blog series
The last decade has seen the spectacular growth of a new genre of Development Bank and consultancy report- the Gap report. Covering issues from adaptation, to renewable energy, to biodiversity conservation, to infrastructure and more, these gap reports all try to quantify the shortfall between existing and needed finance to achieve specified outcomes or targets. The overarching message of all this ‘gap talk’ is that investment is not keeping pace with huge and growing financing needs to address the ecological crisis. Gap talk can offer useful numbers to understand the magnitude of challenges for achieving just decarbonization, building more resilient cities, or ending the 6th extinction. But the ubiquitous takeaway, steeped in capitalist-realism, is that there is not, and never will be, enough public financing from governments or International Financial Institutions (IFIs) to achieve these funding targets. Further, gap talk often obscures why this funding is needed in the first place, or the political economic mechanisms that are actually making the gaps grow, like harmful subsidies for oil and destructive agricultural practices or predatory debt relationships that prevent countries in the Global South from investing in climate-safe infrastructure or biodiversity safeguards.
Continue reading “The narrow allure of bridging funding gaps with blended finance”