Finance in Common Summit – An opportunity for bold climate action
Sophie Richmond explores why the summit presents an opportunity for public financial institutions to support climate action
By Kathy Grenville
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The Finance in Common Summit takes place on the 11th and 12th November. It is the first ever meeting of all 450 public development banks, such as the World Bank, European Investment Bank and African Development Bank as well as smaller national and bilateral development banks from across the globe.
The summit, organised by the AFD (French Development Agency), with the backing of President Macron and UN Secretary General Gutteres, was due to take place in person in Paris but unsurprisingly has been moved online due to the pandemic.
The summit organisers are aiming for two outcomes. Firstly, to agree and publish a joint declaration from all of the public development banks ‘stating their willingness to contribute to the recovery and align with sustainable finance principles’ and, secondly, to build a community of public development banks to continue to work together beyond the summit.
Advocacy groups have described this as an opportunity for public finance institutions to take bold action and commit to aligning their investment policies with climate and development goals including the Paris Agreement, biodiversity protection and the Sustainable Development Goals.
Why do public development banks’ actions matter?
The public development banks together spend USD$ 2 trillion per year – representing 10% of all investments in the world annually - so how they spend public money is hugely important. With vast amounts of public money being spent as a result of the COVID-19 crisis, decisions made now and at the summit about how to use these funds will have long-term consequences. Decisions, therefore, must include the acceleration of a sustainable and fair recovery that simultaneously tackle the climate and economic crises.
What are the expectations for the summit?
Civil society organisations are working together to call for concrete actions at the summit which foster a sustainable, just recovery to Covid-19 and that also promote social, gender and racial justice, community care, health and well-being, human rights, workers’ rights and the fight against inequality.
The climate crisis has not gone away during the Covid crisis. To avoid catastrophic climate change we need to keep global warming below 1.5°C. Crucially, this means we need to stop burning fossil fuels.
We also know that the scaling up of investments in renewable energy, and the expansion of finance for universal energy access will support sustainable development for the most vulnerable. For example, it will help reduce air pollution and health problems, and improve services such as health clinics and hospitals.
Public finance has a responsibility to lead the way, to demonstrate what leadership on climate looks like and to finance the shift to a sustainable, renewable global energy system which benefits all.
The Big Shift Global coalition, a campaign calling for an end to public financing of fossil fuels and a shift to investment in renewable sustainable energy, considers the summit to be an opportunity for the multilateral development banks (MDBs) to take the lead in demonstrating ambition.
MDBs have proved in the past the potential power of their collaboration. In 2017, nine MDBs announced they would align their finance with the Paris Agreement, and in 2018 they formed a joint working group. The aim of which was to ensure that the actions and projects funded by these banks are in line with the Paris Agreement’s goal of ensuring global temperatures remain below 1.5°C of warming.
So far, though, the recovery response from the MDBs has not demonstrated a strong commitment to Paris-alignment. For example, preliminary data from Oil Change International’s Shift the Subsidies database shows that the World Bank has spent at least USD$1 billion in funding new fossil fuel projects during the recovery.
Now is the time for the MDBs to show how they will put their commitment to the Paris Agreement into practice. Specifically, the Big Shift Global Campaign is calling for concrete action from the MDBs at Finance in Common to announce:
- an end to all direct and indirect support for coal, oil and gas to avoid exacerbating the climate crisis
- to increase investment sustainable, renewable energy projects ensuring universal energy access
- and to announce, with no further delay, the framework they will use to work together to align their investments with the Paris Agreement
Bold action by public finance institutions can leverage wider action and redirect global financial flows. It can also pave the way for further ambition at COP26. It is more crucial than ever that public money is being used to increase the resilience of the most vulnerable and not to exacerbate the climate crisis. Finance in Common offers the opportunity to make decisive collection action – all eyes will be watching to see whether real, positive progress is made.