4 signs of progress at the UN climate change summit
Something significant is happening in the desert in Egypt as countries meet at COP27, the United Nations summit on climate change.
Despite frustrating sclerosis in the negotiating halls, the pathway forward for ramping up climate finance to help low-income countries adapt to climate change and transition to clean energy is becoming clearer.
I spent a large part of my career working on international finance at the World Bank and the United Nations and now advise public development and private funds and teach climate diplomacy focusing on finance. Climate finance has been one of the thorniest issues in global climate negotiations for decades, but I’m seeing four promising signs of progress at COP27.
Getting to net zero – without greenwashing
First, the goal – getting the world to net zero greenhouse gas emissions by 2050 to stop global warming – is clearer.
The last climate conference, COP26 in Glasgow, Scotland, nearly fell apart over frustration that international finance wasn’t flowing to developing countries and that corporations and financial institutions were greenwashing – making claims they couldn’t back up. One year on, something is stirring.
In 2021, the financial sector arrived at COP26 in full force for the first time. Private banks, insurers and institutional investors representing US$130 trillion said they would align their investments with the goal of keeping global warming to 1.5 degrees Celsius – a pledge to net zero. That would increase funding for green growth and clean energy transitions, and reduce investments in fossil fuels. It was an apparent breakthrough. But many observers cried foul and accused the financial institutions of greenwashing.
In the year since then, a U.N. commission has put a red line around greenwashing, delineating what a company or institution must do to make a credible claim about its net-zero goals. Its checklist isn’t mandatory, but it sets a high bar based on science and will help hold companies and investors to account.
Reforming international financial institutions
Second, how international financial institutions like the International Monetary Fund and World Bank are working is getting much-needed attention.
Over the past 12 months, frustration has grown with the international financial system, especially with the World Bank Group’s leadership. Low-income countries have long complained about having to borrow to finance resilience to climate impacts they didn’t cause, and they have called for development banks to take more risk and leverage more private investment for much-needed projects, including expanding renewable energy.
That frustration has culminated in pressure for World Bank President David Malpass to step down. Malpass, nominated by the Trump administration in 2019, has clung on for now, but he is under pressure from the U.S., Europe and others to bring forward a new road map for the World Bank’s response to climate change this year.
