Mobilising UNDP support for climate finance
How is the United Nations Development Programme helping to mobilise the support needed for climate finance?
Among United Nations climate conferences, Azerbaijan’s 29th Conference of the Parties to the Framework Convention on Climate Change will likely be remembered as a landmark with finance at its core with a new collective quantified goal that will unlock critical climate finance for developing countries.
This discussion is happening at a time of macroeconomic stress. In high income countries, there is a tendency to prioritise national interests, often overlooking the fact that averting climate catastrophe is essential to protecting those very interests.
In domestic terms, in the wealthier countries we’re seeing encouraging levels of investment. However, emerging economies are frequently told they must depend on fossil fuels, even at their peril, by a self-serving financial and industrial world of actors who continue as if there is no consequence to their actions. The banks and investors pouring money into oil, gas and coal today – the companies leading the fossil fuel sector – are abdicating their responsibility in pursuit of short-term shareholder interests. It would not be surprising to see these companies face legal consequences to hold them accountable, similar to previous cases where firms were prosecuted for wilfully ignoring or concealing pollution.
We face a challenge in overcoming the divergent choices between the outdated economy that prioritises short-term gains before the inevitable consequences arise – or shifting financing, regulation and incentives to enable those transformations. Moreover, deliberate polarisation is turning people against cleaner energy and e-mobility. Nobody talks about the price we are paying – and will pay for generations to come – if we don’t act today.
UNDP is committed to helping countries find their own ways to act. This is not just an issue of national planning and budgeting; it is also a strategy where equity, fairness and trust in institutions are critical.
That includes assisting over 120 countries to enhance their climate pledges – or nationally determined contributions – through our Climate Promise initiative. This approach is also prompting them to leverage new sources of finance that can be channelled to vital areas including poverty eradication, job creation and the just energy transition. We hope this work will allow countries to arrive at COP30 in Brazil in 2025 with NDCs that allow at least a remote chance of reaching the 1.5°C target. That’s a precondition for attracting finance, whether it is allocating public investment in energy infrastructure or leveraging significant private capital. Our work to support Integrated National Financing Frameworks – supporting 86 countries to examine their resource availability including domestic, international, concessional, public and private finance and their strategies for multiplying these resources – is also significant because countries need both public and private capital. There is no way into the future without significant buy-in from financial and capital markets, industry and the corporate sector. The countries that are succeeding have the right mix of regulation and incentives, mobilising support that has proven catalytic and transformative.
What key things should the ministers and leaders at Baku do to help close the gap?
First, agree on a credible quantifiable goal. It will exceed $100 billion, which was the previous floor – now the basement – and we need to reach for the ‘third floor’. They need to identify a pathway to reconciling the need for finance and investment with the need for an accelerated transformation towards net zero. Otherwise, we will not find cooperative ways to work on these issues. It won’t deliver signed cheques the next day – but the pathway and commitments need to be credible and must acknowledge that those who can afford to invest more – in the
private sector, the financial sector and capital markets – need to step up.
Second, international financial institutions must enhance their role as multipliers of investment and support. Indeed, for poor, vulnerable and indebted countries, instruments such as the Green Climate Fund and the Global Environment Facility are critical. There is an acute need for more concessional and grant financing. To ask those countries to add to their national debt while trying to address climate change and clean energy access is simply illogical. This will lead to default. We need to accept that there are countries and communities where providing grants is both effective and efficient, and we need to increase that finance.
The wealthiest economies are allocating just 0.37% of their combined gross national income in official development assistance. They’re not only missing an opportunity, but also causing the failure to address today’s great challenges – climate change, biodiversity loss, increasing pollution, growing inequalities driving migration and the emergence of a technological era that could create even more inequalities. If we believe that 0.37% can buy our way out, we are mistaken. We need to recognise our shared interests in that quantifiable goal. And we need to pull the levers from multipliers to international financial institutions to grants – and understand that we are all investors in this climate transition.
Kenya, Uruguay, China, India, Costa Rica and Morocco invested their own taxpayers’ money and domestic capital to advance remarkable energy transitions. They are co-investors in this global endeavour, but are largely unrecognised for it. We should look at these global negotiations not just as institution-based multiplying but also as ‘global multiplying’. If the wealthy world invests more, it will release more of the developing world’s resources. Together as co-investors, we can mobilise the $3 trillion needed to advance this energy transition.
The Pact for the Future, agreed by world leaders, aims to ensure that the long-term consequences of today’s actions are considered. Central to this vision is the long-overdue reform of our international financial architecture, which is not simply about amplifying resources for sustainable development and climate action. It is about ensuring that we do not shift today’s challenges to future generations but instead pass on a ‘torch of choice’, empowering them with the opportunity to shape their own destinies.
