The 27th United Nations Conference of the Parties, or COP27, is being held in the seaside resort town of Sharm-El-Sheikh, Egypt from 6 November until 18 November 2022. This climate change conference, the most significant of its kind, brings together world and community leaders, policymakers, financiers, activists, researchers and representatives from almost every nation each year to act on our collective climate goals and take steps to curb the climate crisis.
This year’s conference has a strong focus on financing loss and damage, getting onto the negotiation agenda after years of pressure. It is the first time a loss and damage fund is being tabled at COP, even after climate disasters like the floods and heat-waves in Pakistan, Bangladesh and China, the famine in Somalia, and wildfires across Europe. Poorer nations on their own are not able to recover from these climate shocks that has cost the global economy US$227 billion this year. Confidence in wealthy nations has been undermined by their failure to deliver on their promise of $100 billion climate finance annually to help poorer nations adapt and mitigate climate threats. To date the gap between the pledges and the flow of capital is too slow to ensure that the most vulnerable will receive the support they need, so the call for loss and damage funds beyond the underdelivered climate finance is a clear indication that impacts are hitting hard. The bitter irony is that those most affected have contributed the least to greenhouse gas emissions. Facing the likelihood of failed funding targets for loss and damage, Barbados Prime Minister, Mia Mottley advocated powerfully against this injustice in her COP27 address, saying:
“This world looks, still, too much like when it was part of an imperialistic empire”
There is rising despair and fatigue regarding climate negotiations and unfulfilled pledges from Pacific, Caribbean and other island representatives, as well as indigenous and other marginalised groups the world over who stand to lose the most. While finance dominated the conversation, those holding the cash and keys to opportunity in the private sector kept the register at finance instruments, risk and return profiles, currency risks and bankable projects showing a lack of innovation and possibility in these urgent times. The syncopation of all actors in the global financial system is clearly out of tune at COP27 as the outdated logics and mechanisms creak on their hinges on this new negotiation agenda.
Climate solidarity means that finance must come to the table for a just, decarbonised, equitable society, as solutions to climate change present an opportunity to address societal and social challenges. CST researcher Wendy McCallum, working on the ReSET project, was in attendance at COP27 sharing the latest research on, Development Finance Institutions (DFIs), a particular group of financial actors that have a critical role to play in the ways they allocate capital and possibly accelerate broader more sustainable transitions.
— ReSET (@ReSET_Energy) November 8, 2022
Wendy presented ReSET’s latest report on financing the Just Energy Transition and the potential of DFIs and Public Development Banks to finance and shape just, low-carbon futures. The research for this report was conducted in collaboration with the Development Bank of Southern Africa (DBSA) and the International Development Finance Club – an international network of national and regional development banks aligned to work together to implement the Sustainable Development Goals & the Paris Climate Agreement agendas.
Not only is this report a first of its kind, it is also significant as a contribution from a global South perspective. You can read the full report here: http://energyforsocialequity.org/wp-content/uploads/2022/11/Catalysing-the-Just-Energy-Transition-On-the-Potential-of-Development-Finance-Institutions-2022.pdf
Wendy also moderated a panel discussion, on behalf of the DBSA, where DFIs discussed their approach to transition finance, which is necessary to facilitate the shift from carbon-intensive ways of producing goods and services, to more decarbonised operations.
CST researcher, Nina Callaghan was also in attendance, co-hosting the ‘Climate Justice in Climate Finance’ event with collaborators the Blended Finance Task Team and the Open Society Foundation. The event drew a diverse audience of financiers, activists, investors, researchers, and philanthropies who discussed possible solutions and approaches to reforming this obdurate financial system that continues to serve narrow interests. Guests offered advocacy and influence for climate justice, recognising their sway in the global and local networks they are part of. It was a very different finance conversation, filled with possibility and courage compared to those happening on the main platforms at COP27.
South Africa has been lauded at COP27 for its leadership and advancement since COP26. The Just Transition Framework facilitated by the Presidential Climate Commission (PCC) as well as the ground-breaking Just Energy Transition Investment Plan (JET-IP) are landmark documents that give clarity and direction to South Africa’s transition ambitions. The JET-IP is a living document that sets out priorities for investment and just social outcomes for coal communities and those most impacted by the transition. New industries in hydrogen and electric vehicles are suggested with a first priority of building power generation and infrastructure to support development. The JET-IP is an example of global South agency to make climate finance fit for purpose. The challenge now is for donor communities and business to adequately answer this call.