To focus on delivering near-term results, in the runup to COP28, Multilateral Development Banks (MDBs), and the United Nations (UN) have agreed to collaborate towards identifying priority actions to mobilize private climate investment in emerging markets and developing countries (EMDCs).

This emerged as part of the consensus during a roundtable discussion at the Summit for a New Global Financing Pact in Paris, France.

The MDBs were represented by Managing Director, of the International Monetary Fund (IMF), Kristalina Georgieva, and President of the World Bank Group (WBG), Ajay Banga.

IMF’s Georgieva, said: “Given the huge financing required to deliver the transition to green and resilient economies, it’s vital that we work in partnership to accelerate investment flows— particularly to emerging and developing economies. Everyone has a role to play—multilateral institutions, national authorities, and the private sector—each using their expertise and comparative strengths. Working together we can harness the power of private capital in the fight against climate change.”

UN Envoy, Carney, said: “The transition to net zero must be global, and the scale of investment required in emerging and developing economies can’t be met with public money alone.

“GFANZ continues to work closely with MDBs, the IMF, and governments as they develop and scale new approaches to address long-standing barriers to private investment, including through the World Bank’s Private Sector Investment Lab, launched today.

WBG’s Banga, said: “Governments, multilateral institutions, and philanthropies aren’t enough to make adequate progress toward climate and poverty goals in emerging markets and developing countries. The scale of our challenge requires the private sector to play a significant role alongside the World Bank Group and other development institutions.

“For years, we have tried – and fallen short – to mobilize meaningful private investment in these markets. Given the urgency and scale of our intertwined challenges, we must try a new approach.

Also in support of this effort are the COP28 President-Designate, Dr. Sultan Al Jaber; and the UN Special Envoy for Climate Action and Finance, Mark Carney, who is also the Co-Chair of the Glasgow Financial Alliance for Net Zero (GFANZ).

COP28 President-Designate, Al Jaber, said: “Climate finance is nowhere near available enough, accessible enough, and affordable enough – especially for countries in the Global South.

“To make finance more available, we need to figure out how to attract much more private capital into the investment pool. Private capital is the force multiplier that can really change the game when it comes to effective climate finance.

“To make financing more accessible, we need to simplify, speed up, and standardize access to climate funds across international financial institutions and specialized funds. And to make finance more affordable, we must drive transparency and price discovery.

The parties believe that “Current climate investment into EMDCs remains insufficient to meet the goals of the Paris Agreement, further underscoring the need to use MDB and other development finance catalytically to unlock local and international private finance.”

They have identified that private capital will need to play a key role in addressing the financing gap for transitioning to net zero.

The parties also emphasized the need to “enhance technical capacity to build a pipeline of bankable climate projects, and implement public policies to establish an enabling environment for investment in the green transition.”

In their opinion, “Ensuring a just and global net-zero transition requires scaling creative and effective solutions, including solutions to mobilizing catalytic private investment in EMDCs.”

Such efforts, they said, will however, “require multi-stakeholder action to position transition finance as a great investment opportunity that would help EMDCs to get on the path of sustainable low-carbon growth and create the necessary market and policy conditions for turning this opportunity into reality.”

private capital will need to play a key role in addressing the financing gap for transitioning to net zero

Against this backdrop, the parties agreed on a set of actions, including:

• Recognizing the progress made by the Working Group focused on Increasing Investment in Sustainable Infrastructure in Emerging and Developing Markets in preparation for the Summit, the co-chairs intend to consider the Working Group’s proposed recommendations.
• Given the importance of a country’s policy environment for enabling investments into climate transition, the IMF will continue to share the lessons learned from early RST programs, and use the roundtable to share experiences going forward.
• The COP28 Presidency will ask MDBs and specialized climate funds to take action on simplifying and streamlining access to climate finance and implement practical new ways of working together as a system with the objective of speeding and scaling up private financing of climate transition in EMDCs.
• Participants will continue to push forward on institution-specific priorities for capital mobilization towards climate goals discussed during the roundtable and share updates on progress in subsequent roundtables.

Source: IMF Press Release