Climate change and sustainable development are inextricably linked. It is critical, therefore, that the post-2015 sustainable development agenda fully embeds climate change.
Likewise, achieving adequate finance is critical for a successful global agreement on climate change in 2015. This agreement needs to be ambitious if it is to turn the world's economy towards a sustainable path by limiting the global temperature increase to 2°C.
Countries are already thinking through the future of climate financing to ensure that the world reaches the level of ambition needed. The 20th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC)
, to be held in late 2014 in Lima under Peru's presidency, will be an important landmark in this sense.
The first thing we need to achieve is greater transparency about climate financing, as well as the results it produces.
We need to scale up climate financing and make sure that the necessary funds and investments get to where they are needed, with a greater degree of predictability.
Second, countries need to think through what conditions and policy frameworks would enable them to scale up climate funding and investments in the long term and effectively manage financial resources. Peru has already taken action on low-carbon and climate-resilient strategies by:
- Promoting public and private funding and investment for various climate change initiatives
- Integrating climate change-related risks within the National Public Investment System
- Creating fiscal instruments for climate resilience and recovery from natural disasters
- Encouraging research and technology for climate change initiatives.
Many ongoing conversations are centred around new and innovative sources of climate finance. The Green Climate Fund (GCF)
was set up in 2013 to co-ordinate and promote these efforts, and countries are currently discussing how to trigger a pledging process.
The GCF offers the opportunity to attract new sources of financing and to support developing countries' national financing strategies. We hope that meaningful pledges to the GCF will be made towards the end of 2014.
Innovative sources of financing are needed if the world economy is to become truly sustainable. This is why we welcome analytical work on attracting financing from institutional investors such as pension funds; on how to grow the green bond* market; on instruments and mechanisms of risk mitigation that can help leverage financial resources; on mobilising domestic resources in developing countries; and on crowdfunding. We all need to be part of the solution.
As we move towards the climate conference, Peru hopes to help countries find convergence around key climate finance issues that increase the level of ambition and prepare the broader roadmap for global agreement on climate change in 2015.
The current discussions on climate change financing will – and must – help to meaningfully inform the post-2015 development agenda to ensure that climate change is fully integrated into the Sustainable Development Goals.
*Two entities of the World Bank Group – the International Bank for Reconstruction and Development
and the International Finance Corporation (IFC)
– have been instrumental to the development of the global green bond market. Proceeds from these bonds are being used for investments that help address climate change. Since 2008, the World Bank has mobilised more than USD 5.3 billion through 61 green bond transactions in 17 currencies, and the IFC has issued USD 3.4 billion in green bonds (World Bank, 2014).