Devex Invested: Climate finance will take center stage at COP 28

It looks like this year’s United Nations Climate Change Conference, or COP 28, will feature a heavy dose of climate finance discussion when it convenes in the United Arab Emirates at the end of the year. Devex Climate Correspondent William Worley breaks down COP 28 President-Designate Sultan Ahmed Al Jaber’s finance priorities for the summit, outlined in his recently released plan. “Climate finance arrangements need to transform to deliver at this scale, to work better as a system and support finance mobilization directed to developing countries at unprecedented levels,” Jaber writes. What does that look like? • Expect a focus on Just Energy Transition Partnerships, or JETPs, which help finance the decarbonization of economies by decommissioning coal plants, for example. The summit could accelerate work on these deals through some sort of package or group approach, the document says. • Jaber called for pledges to the United Nations’ Green Climate Fund, and more funding to help countries adapt to climate change. Also expect more focus on the loss and damage fund agreed last year — though donors have yet to really pony up cash, and U.S. climate envoy John Kerry seemed to rule out the U.S. government participation last week. • “COP28 will help build the foundation for a finance system of the future” with the aim of identifying “principles for a new financial framework that can deliver the net zero transition in an inclusive way” globally, covering adaptation, mitigation, and loss and damage, the document says. • That will require several key areas of reform, including more climate finance for lower-income countries, better use of public finance to catalyze private capital for the clean energy transition, and better coordination between institutions and funding sources. Unlocking private climate finance in low-income countries will likely include improving regulatory systems and agreeing to definitions for transition finance, Jaber says. Read: What’s inside the UAE’s action plan for COP 28 (Pro) Watch: How the Bridgetown initiative envisions global financial system reform (Pro) + Not a Devex Pro member yet? Start your 15-day free trial and, for a limited time only, we’re offering $100 off an annual Devex Pro membership — sign up by July 21. Climbing climate commitments £1.27 billion --— That’s the total investment commitments British International Investments made last year. Nearly half of those were climate-related. Despite ramping up its climate finance, the United Kingdom’s development finance agency actually committed less funding than the year before. That’s in large part due to a difficult global macroeconomic environment. One key challenge was a drop in the value of the British pound in 2022, which meant BII had less money to make new investments, CEO Nick O’Donohoe said at an event last week. The agency is “subject to an enormous amount of scrutiny,” he said, adding that it has engaged with critics and is working to improve transparency and address concerns. Read: BII doubles down on climate in first year of new strategy It’s not just climate To date much of the momentum and direction behind ongoing efforts to reform the World Bank have come from the United States and other wealthy donors. But that has sometimes made for a rocky relationship with lower-income countries which traditionally receive the bank’s funds. As of last week, it looks like African states have formed a unified position on those reforms, according to my colleague Shabtai Gold, who reviewed a consensus document. African states want a focus on fighting poverty and hunger and will push back against the narrow demands of wealthy Western shareholders, who want attention on climate change and pandemics, he writes. “For African countries, we need to reinforce the message on global public goods to ensure that their needs, priorities and realities are taken on board. Development is also a priority for Africa,” Abdoul Salam Bello, an executive director at the bank who represents a bloc of states from the continent on the board of the lender, tells Shabtai. The group of African nations has also called for ensuring the bank is responsive to country strategies and making the World Bank support more flexible, more responsive and more quickly available. Read: African states detail their needs on World Bank reform ahead of G20 What we’re reading World Bank to "stretch every dollar" with new lending measures. [Financial Times] The African Development Bank is in talks to do its first debt-for-nature swap. [Bloomberg] Are banks ready for the climate transition? A new pilot assesses risk. [MSCI blog] Five things to know about the fight over ESG investing playing out in the U.S. Congress. [The Hill] France has yet to return the €81,556 cash it seized from an EU-funded development organization in 2019. [Devex]