Livemint, May 29, 2023
By Pradeep S. Mehta
Rising carbon emissions and biodiversity losses have resulted in huge imbalances and pose one of the gravest threats to the existence of mankind. The vagaries of human- induced environmental threats spare none. Vulnerability of socially and economically weaker sections is compounded by their position, but it doesn’t mean that the more privileged are likely to get away. This calls on the privileged few to think of and put in place innovative finance solutions to deal with the crises.
Recent commitments on climate and biodiversity: A Loss and Damage (L&D) Fund was established at the 27th Conference of Parties to the United Nations Framework Convention on Climate Change (COP27) summit in Sharm-el-Sheikh, Egypt in November. The Fund, as its name suggests, is proposed to assist developing countries that have been harmed and are ‘particularly vulnerable’ to the adverse effects of climate change. However, negotiations on its finer details are yet to be worked out. Even so, it is doubtful that the promises, when made, will be kept. History is replete with failed promises. Rich countries, for example, did not meet the annual $100 billion commitment they made at the 2009 Copenhagen Summit to support developing countries in addressing the impact of climate change.
The 15th Conference of Parties to Convention on Biodiversity COP held in Montreal in December resulted in a global commitment to raise international financial flows from developed to developing countries to at least $30 billion per year by 2030. Some members also committed to mobilise at least $200 billion every year from public and private sources for biodiversity related funding by 2030. But again, there is no clear roadmap to do so. Hazy negotiations raise suspicions about the targets being met, which is why we need innovative agnostic solutions with a clear implementation strategy that are free from political vagaries.
Creating a fund for environmental recovery and innovative finance: While COP27 saw several countries expressing an interest in exploring ‘innovative sources’ of finance, nearly six months later, these sources are yet to be identified or a broad canvas designed.
The G20 Bali Leaders’ declaration in November too called on member countries to unlock innovative sources of financing to support the achievement of sustainable development goals (SDGs) in lower- and middle-income countries. The declaration further exhorted multilateral development banks to mobilize additional financing for addressing global challenges. However, the identification of such precise solutions has not seen any tangible progress. Hopefully, the G20 summit in India will go beyond platitudes and offer concrete plans, as its sherpa, Amitabh Kant, indicated at a CUTS event on Sunday. “We need innovative finance solutions to deal with climate
change, which could include blended finance and co-financing with the private sector,” he said.
A number of funds have been created over the last 30 years, with a host of commitments. To name a few, the Green Climate Fund, Adaptation Fund, and Special Climate Change Fund for supporting global climate and environmental financing efforts. But, the gap between requirements and commitment still exists and is widening.
To create an overarching fund for the planet’s recovery, there are various proposals being discussed such as a Global Carbon Tax, Digital Services Tax, Property Tax, Airplane Tax, cesses on carbon emissions, biodiversity, climate resilience and climate adaptation, Financial Transactions Tax etc. These together can be a good bouquet to create a fund of funds to deal with both climate and biodiversity issues.
Delivering meaningful financing solutions is intrinsically connected to our efforts to arrest the backslide of targets set out under the SDGs. SDG 13 (which covers climate action) calls upon states to take urgent action to combat climate change and its impacts. Similarly, SDG 15.5 calls for taking urgent action to reduce the degradation of natural habitats and halt the loss of biodiversity.
Holistic approach—Engaging other stakeholders: Private capital financing has a vital role in plugging the gaps for global sustainable financing, particularly so in emerging markets and developing economies, where governments are inhibited by capacity constraints. Raising the scale of private capital financing in sustainability initiatives could help infuse billions towards a host of initiatives. There is a need to create an ecosystem that incentivises the creation of financial assets that can contribute towards emission reduction and biodiversity conservation targets. Though private capital financing has increased over the last decade, it needs to be scaled up significantly if the world wishes to meet the agreed targets.
Conclusion: As the ill effects of climate and biodiversity losses take a toll on the planet and the human race, the world urgently needs an overarching framework that is transparent, verifiable, agnostic and accountable. Targets set by the international community can only be met if it follows up with timely allocation of the required funds, which will require exploring a variety of resources through a bouquet approach. Since we face a race against time to leave a cleaner and greener world for future generations, the delivery of critical action should not merely be adequate, but also timely.
The author is secretary general, CUTS International Jayesh Mathur of CUTS contributed to the article.