Climate activists transform the Eiffel Tower into a wind turbine ahead of the Global Climate Finance Summit, Wednesday, June 21, 2023 in Paris. Heads of state, finance leaders and activists from around the world will converge in Paris this week for a summit aimed at discussing how to overhaul the world's development banks — like the World Bank and IMF— and usher them into a post-pandemic world with a rapidly changing climate.
(AP Photo/Michel Euler)
FATIMA HUSSEIN and PAUL WISEMAN
Wed, June 21, 2023
WASHINGTON (AP) — Heads of state, finance leaders and activists from around the world will converge in Paris this week to seek ways to overhaul the world's development banks — like the International Monetary Fund and World Bank — and help them weather a warmer and stormier world.
While restructuring debt and reducing poverty will be part of the summit Thursday and Friday, climate will be the main driver, with representatives from developing nations in Africa, Asia and elsewhere having a prominent seat at the table.
The World Bank and IMF have been criticized for not factoring climate change into lending decisions and being dominated by wealthy countries like the U.S., with the neediest nations most at risk of global warming left out of calling the shots.
While those are the primary problems to solve, some doubt the splashy summit led by French President Emmanuel Macron will be able to take major strides to correct those challenges.
Still, the Summit for a New Global Financing Pact will draw roughly 50 heads of state and government — from Germany, Brazil, Senegal, Zambia and more — with more than 100 countries represented.
Barbados Prime Minister Mia Mottley will play a major role as a leader of the Bridgetown Initiative, a plan to reform development lending by freeing up money after climate disasters and targeting the higher borrowing costs and debt that developing nations face.
U.S. Treasury Secretary Janet Yellen, Chinese Premier Li Qiang, new World Bank President Ajay Banga, IMF Managing Director Kristalina Georgieva, and climate activists Greta Thunberg and Vanessa Nakate also are set to attend.
Masood Ahmed, president of the Center for Global Development think tank in Washington, isn’t expecting much concrete action from the gathering but a broad agreement that “we’ve got to think much bigger, much bolder. We need to be willing to change."
It’s been hard, however, to summon the political will to spend taxpayer money to combat climate change, said Ahmed, a former senior official in both the IMF and World Bank.
For example, “in the United States, we don’t have in Congress today the kind of the support that you would want to have for a major global initiative on climate,” he said. “That makes it harder for people to translate what is a sensible strategy, a necessary strategy, a critical set of actions into legislative action that puts money on the table."
French organizers want to show they can keep fighting poverty and meet the challenges of climate change at the same time, said a top French official said, who was not authorized to be publicly named according to the country’s presidential policy.
Organizers say the summit will end with a summary of commitments, including a roadmap for what to expect from this year's meeting of the Group of 20 major economies and U.N. climate conference.
But climate advocates say they want to see more meaningful commitments — like new money to help climate-vulnerable nations build sustainable infrastructure or reallocating existing funds to new climate-related projects.
Andrew Nazdin, director of the activist group Glasgow Actions Team, said the development banks “need to expand their lending — and fast — if we’re going to avoid the worst impacts of the climate crisis.”
A U.S. Treasury official told The Associated Press that big new monetary pledges should not be expected from the summit — rather it’s viewed as a chance to push the case for an evolution of the development banks. The official spoke on the condition of anonymity to preview planning for the gathering.
Earlier this year, the World Bank announced that it would increase its lending by $50 billion over the next 10 years to combat extreme poverty and mitigate and adapt to climate change.
The World Bank is trying to bounce back from comments by former President David Malpass seeming to doubt the science that burning fossil fuels causes global warming. He stepped down this year amid criticism and has been replaced by Banga — who is attending his first big international meeting since taking the helm.
The World Bank and IMF did not immediately offer comment.
Yellen, for her part, has called for climate to be factored into finance since at least 1997, when she chaired the White House Council of Economic Advisers. She's been vocal about the need to reform the multilateral banks and bringing lower-income countries into the conversation.
She has described climate change as an “existential crisis” that no one country could fight alone.
“We must also help developing countries transition their economies away from carbon-intensive energy sources and expand access to clean energy,” she said last October.
Justin Mankin, a Dartmouth climate scientist, hopes those at the summit take into account the inequities that climate-vulnerable nations face and avoid reinforcing them.
“I would argue that to pursue development in a world where global warming has already occurred has to take on those inequities,” Mankin said, “and reckon with the fact that developing economies are in a foot race” against richer countries, which have been massive polluters and also hold the purse strings.
Because the global development banks favor larger industrialized nations, the conditions attached to climate aid should not be unnecessarily stringent, he said.
"What sets of conditions these banks impose on countries is one way of knowing whether these inequities can be reinforced," Mankin said.
More specific reform proposals are likely to come in the next few weeks from a G20 panel created to recommend changes at the IMF, the World Bank and other global development agencies, said Ahmed, the former IMF and World Bank official.
One of the biggest challenges will be bringing together nations with diverging interests and growing geopolitical tensions, including between the U.S. and China.
“The combination of these geopolitical tensions, suspicion of globalization and of institutions, and only a partial recognition that solving these global problems is going to cost taxpayers makes it harder to follow through with actions,” Ahmed said.
___
Associated Press reporters Seth Borenstein in Washington and Sylvie Corbet in Paris contributed.
MUFG, partners launch $1.5 bln climate finance platform
Simon Jessop and Isla Binnie and Leigh Thomas
Thu, June 22, 2023
*
GAIA to help scale up finance to developing countries
*
FinDev Canada among public, private, philanthropic backers
*
Expects to impact nearly 20 mln people across 25 countries
PARIS, June 22 (Reuters) - Mitsubishi UFJ Financial Group and partners including Canada's development finance body have launched a $1.5 billion platform to help drive climate-focused investment into developing and emerging countries.
The new venture, dubbed GAIA and announced at the Summit for a New Global Financial Pact in Paris on Thursday, aims to blend private sector investment with concessional capital from public and philanthropic groups.
Alongside FinDev Canada, the platform is backed by various U.N. bodies as well as public, private and philanthropic groups, and hopes to impact nearly 20 million people across 25 countries, the group said.
Getting more money to the poorer countries bearing the brunt of climate-related natural disasters so they can better prepare to withstand them at the same time as moving to a low-carbon world is a central aim of the summit and global climate talks.
To-date, though, flows of capital have been low and focused mainly in developed countries, Christopher Marks, MUFG's Head of Portfolio Solutions, Innovative Finance & Growth Markets for Europe, the Middle East and Africa, told Reuters on the sidelines of the conference.
As of 2019-2020, total global climate finance was $653 billion, well below the estimated annual need of $4.3 trillion by 2030, data from the Climate Policy Initiative showed, with developing countries getting less than a quarter.
"The structure and activities of GAIA are intended to respond to the main obstacles and barriers limiting privately-financed investments in climate adaptation and mitigation projects in emerging markets," Marks said.
Specifically, it aimed to provide support such as long-term loans in both hard and local currencies, mitigating risk by offering different tranches and hedging local currencies to make them more appealing to institutional investors.
Including such features would allow GAIA to target multiple sectors and jurisdictions and attract institutional investors that would not normally invest on their own, Marks said.
"A key feature of the platform is the ability to target smaller projects – which are outside of appetite of standalone investors," Marks said. After proving the concept, the hope is the model can be scaled up and used in other countries.
In addition to projects in renewable energy and low-carbon transport, financing would also be made available to sectors sometimes overlooked such as water and waste management, sustainable agriculture, coastal rehabilitation and nature-friendly construction.
A total of 70% of the GAIA funds would be dedicated to climate adaptation projects, and a minimum of 25% to the least developed countries (LDCs) and Small Island Developing States (SIDS), in recognition of their vulnerability to climate change.
"Our ability to structure solutions which address mitigation and adaptation depends heavily on how well the public and private sector can work together to bring critical financing options to the table," said FinDev Chief Investment officer Paulo Martelli in a statement.
"GAIA is an important – and innovative – step in that direction and demonstrates the potential that is unlocked by bringing multiple players together in support of a common, global problem." (Editing by Philippa Fletcher)
Simon Jessop and Isla Binnie and Leigh Thomas
Thu, June 22, 2023
*
GAIA to help scale up finance to developing countries
*
FinDev Canada among public, private, philanthropic backers
*
Expects to impact nearly 20 mln people across 25 countries
PARIS, June 22 (Reuters) - Mitsubishi UFJ Financial Group and partners including Canada's development finance body have launched a $1.5 billion platform to help drive climate-focused investment into developing and emerging countries.
The new venture, dubbed GAIA and announced at the Summit for a New Global Financial Pact in Paris on Thursday, aims to blend private sector investment with concessional capital from public and philanthropic groups.
Alongside FinDev Canada, the platform is backed by various U.N. bodies as well as public, private and philanthropic groups, and hopes to impact nearly 20 million people across 25 countries, the group said.
Getting more money to the poorer countries bearing the brunt of climate-related natural disasters so they can better prepare to withstand them at the same time as moving to a low-carbon world is a central aim of the summit and global climate talks.
To-date, though, flows of capital have been low and focused mainly in developed countries, Christopher Marks, MUFG's Head of Portfolio Solutions, Innovative Finance & Growth Markets for Europe, the Middle East and Africa, told Reuters on the sidelines of the conference.
As of 2019-2020, total global climate finance was $653 billion, well below the estimated annual need of $4.3 trillion by 2030, data from the Climate Policy Initiative showed, with developing countries getting less than a quarter.
"The structure and activities of GAIA are intended to respond to the main obstacles and barriers limiting privately-financed investments in climate adaptation and mitigation projects in emerging markets," Marks said.
Specifically, it aimed to provide support such as long-term loans in both hard and local currencies, mitigating risk by offering different tranches and hedging local currencies to make them more appealing to institutional investors.
Including such features would allow GAIA to target multiple sectors and jurisdictions and attract institutional investors that would not normally invest on their own, Marks said.
"A key feature of the platform is the ability to target smaller projects – which are outside of appetite of standalone investors," Marks said. After proving the concept, the hope is the model can be scaled up and used in other countries.
In addition to projects in renewable energy and low-carbon transport, financing would also be made available to sectors sometimes overlooked such as water and waste management, sustainable agriculture, coastal rehabilitation and nature-friendly construction.
A total of 70% of the GAIA funds would be dedicated to climate adaptation projects, and a minimum of 25% to the least developed countries (LDCs) and Small Island Developing States (SIDS), in recognition of their vulnerability to climate change.
"Our ability to structure solutions which address mitigation and adaptation depends heavily on how well the public and private sector can work together to bring critical financing options to the table," said FinDev Chief Investment officer Paulo Martelli in a statement.
"GAIA is an important – and innovative – step in that direction and demonstrates the potential that is unlocked by bringing multiple players together in support of a common, global problem." (Editing by Philippa Fletcher)
IMF, World Bank under pressure to boost climate change financing
Erwan LUCAS
Thu, June 22, 2023
IMF Managing Director Kristalina Georgieva will join world leaders at a two-day summit in Paris on the interlinked challenges of poverty alleviation and climate change (Mandel NGAN)
International Monetary Fund (IMF) and World Bank officials are joining dozens of economic leaders for a two-day summit in Paris, aiming to tackle the interlinked challenges of poverty alleviation and climate change.
The meetings, hosted by French President Emmanuel Macron, have been billed as an opportunity to refocus the global financial architecture to better address the vast scale of financing needed to meet theworld'sclimate targets by the end of the decade.
The summit has also brought focus on the IMF and World Bank's own climate change policies, amid calls for multilateral development banks (MDBs) to do more to help developing economies access funds to both adapt to climate change and deal with its consequences.
- Insufficient funds-
Both the IMF and World Bank have introduced policies in recent years to help countries deal with the climate transition.
Last year, the IMF launched its Resilience and Sustainability Trust (RST), with just over $40 billion in funds at its disposal, to offer longer-term loans to finance projects related to these issues.
Bangladesh, Barbados, Costa Rica and Rwanda are the first countries to benefit.
And at the World Bank, former president David Malpass lauded moves under his watch to double climate financing to $32 billion and to put in place a global warming action plan for the period of 2021 to 2025.
His successor, Ajay Banga, used his inaugural address to call on the bank to "pursue both climate adaptation and mitigation," among other issues.
"Change is appropriate for the World Bank," Banga said. "It isn't a symptom of failure or drift or irrelevance, it is a symptom of opportunity, life, and importance."
But both institutions admit that their financing capacities are currently insufficient to meet the needs of developing economies, which the IMF estimates will be well over a trillion dollars per year by 2025.
- Institutional reforms -
The United States, European Union and others have been pushing a series of reforms to the IMF and World Bank since late last year.
These include proposals to reform the governance of the MDBs to ensure a greater role for major emerging markets and developing economies, and to expanding their missions to integrate climate change financing.
The goal is to make progress on these reforms by the next annual meeting of the IMF and World Bank, which take place in October in Morocco.
The World Bank's primary objective is to promote long-term economic development and poverty reduction, while the IMF looks to promote global macroeconomic and financial stability by providing financial and technical assistance and policy advice.
Some developing countries have voiced concerns that these reforms could lead MDBs to prioritize climate change over poverty alleviation.
The most significant breakthrough so far came at the IMF and World Bank spring meetings, when agreement was reached to boost the World Bank's lending capacity by up to $5 billion per year for 10 years.
However, this was achieved primarily by increasing the bank's leverage, and not through the provision of additional funding from World Bank member countries.
- More to do -
Even if the reform process is successful, the IMF and World Bank's leaders have stressed that international financial institutions cannot by themselves meet the enormous needs of the most vulnerable countries.
Banga centered his campaign for the World Bank presidency on greater private sector involvement in financing the climate transition.
"There is not enough money without the private sector," the former Mastercard chief executive told reporters in March, adding that the World Bank should set up a system that could help share risk or mobilize private funds to achieve its goals.
Heading into the summit, there were hopes that progress could be made on a stalled two-year-old pledge by wealthier countries to recycle $100 billion in IMF special drawing rights (SDRs) from rich countries to vulnerable economies.
SDRs are foreign exchange reserve assets awarded to countries based on how much they contribute to the IMF.
The stalled plan, which some European countries resisted, was for wealthier countries to lend these foreign exchange reserve assets to the IMF, which could in turn lend them to developing economies.
Ahead of the summit, France and Japan announced that they would redeploy 30 percent of their SDRs for this purpose.
Media reports suggest that the Paris summit could yield a breakthrough in pledges from other countries, which would help hit the $100 billion target.
Erwan LUCAS
Thu, June 22, 2023
IMF Managing Director Kristalina Georgieva will join world leaders at a two-day summit in Paris on the interlinked challenges of poverty alleviation and climate change (Mandel NGAN)
International Monetary Fund (IMF) and World Bank officials are joining dozens of economic leaders for a two-day summit in Paris, aiming to tackle the interlinked challenges of poverty alleviation and climate change.
The meetings, hosted by French President Emmanuel Macron, have been billed as an opportunity to refocus the global financial architecture to better address the vast scale of financing needed to meet theworld'sclimate targets by the end of the decade.
The summit has also brought focus on the IMF and World Bank's own climate change policies, amid calls for multilateral development banks (MDBs) to do more to help developing economies access funds to both adapt to climate change and deal with its consequences.
- Insufficient funds-
Both the IMF and World Bank have introduced policies in recent years to help countries deal with the climate transition.
Last year, the IMF launched its Resilience and Sustainability Trust (RST), with just over $40 billion in funds at its disposal, to offer longer-term loans to finance projects related to these issues.
Bangladesh, Barbados, Costa Rica and Rwanda are the first countries to benefit.
And at the World Bank, former president David Malpass lauded moves under his watch to double climate financing to $32 billion and to put in place a global warming action plan for the period of 2021 to 2025.
His successor, Ajay Banga, used his inaugural address to call on the bank to "pursue both climate adaptation and mitigation," among other issues.
"Change is appropriate for the World Bank," Banga said. "It isn't a symptom of failure or drift or irrelevance, it is a symptom of opportunity, life, and importance."
But both institutions admit that their financing capacities are currently insufficient to meet the needs of developing economies, which the IMF estimates will be well over a trillion dollars per year by 2025.
- Institutional reforms -
The United States, European Union and others have been pushing a series of reforms to the IMF and World Bank since late last year.
These include proposals to reform the governance of the MDBs to ensure a greater role for major emerging markets and developing economies, and to expanding their missions to integrate climate change financing.
The goal is to make progress on these reforms by the next annual meeting of the IMF and World Bank, which take place in October in Morocco.
The World Bank's primary objective is to promote long-term economic development and poverty reduction, while the IMF looks to promote global macroeconomic and financial stability by providing financial and technical assistance and policy advice.
Some developing countries have voiced concerns that these reforms could lead MDBs to prioritize climate change over poverty alleviation.
The most significant breakthrough so far came at the IMF and World Bank spring meetings, when agreement was reached to boost the World Bank's lending capacity by up to $5 billion per year for 10 years.
However, this was achieved primarily by increasing the bank's leverage, and not through the provision of additional funding from World Bank member countries.
- More to do -
Even if the reform process is successful, the IMF and World Bank's leaders have stressed that international financial institutions cannot by themselves meet the enormous needs of the most vulnerable countries.
Banga centered his campaign for the World Bank presidency on greater private sector involvement in financing the climate transition.
"There is not enough money without the private sector," the former Mastercard chief executive told reporters in March, adding that the World Bank should set up a system that could help share risk or mobilize private funds to achieve its goals.
Heading into the summit, there were hopes that progress could be made on a stalled two-year-old pledge by wealthier countries to recycle $100 billion in IMF special drawing rights (SDRs) from rich countries to vulnerable economies.
SDRs are foreign exchange reserve assets awarded to countries based on how much they contribute to the IMF.
The stalled plan, which some European countries resisted, was for wealthier countries to lend these foreign exchange reserve assets to the IMF, which could in turn lend them to developing economies.
Ahead of the summit, France and Japan announced that they would redeploy 30 percent of their SDRs for this purpose.
Media reports suggest that the Paris summit could yield a breakthrough in pledges from other countries, which would help hit the $100 billion target.
'Nowhere to run': Islands stress climate risk at finance summit
Julien MIVIELLE
Wed, June 21, 2023
Two local residents wade through flooding caused by high ocean tides in Majuro Atoll, capital of the Marshall Islands (GIFF JOHNSON)
Small island states sinking under rising seas are encouraged by a summit starting Thursday charged with revamping the global financial system to better cope with climate change and other 21st-century challenges, their representative to the talks told AFP.
The two-day summit in Paris, hosted by France, "is very good news because it fits well with what we are trying to do", Samoa's Fatumanava Pa'olelei Luteru, chair of the Alliance of Small Island States (AOSIS), told AFP in an interview.
Sea levels sure to rise well into the 22nd century and cyclones made more deadly by global warming have put AOSIS' 39 low-lying island and coastal states on the front lines of climate impacts and UN talks.
Lacking political clout, they used moral persuasion in pushing the world to adopt the 2015 Paris Agreement's aspirational target of capping global warming at 1.5 degrees Celsius, since adopted as a near universal goal.
Today, these and other developing countries that have barely contributed to the problem -- but whose economies are shrinking as a result -- want access to international financial support to be based not just on economic criteria, but also on vulnerability.
"If a cyclone comes, it doesn't differentiate, it doesn't know if you're low-income, middle-income country or even a high-income country," said Luteru.
"It will set back your development years," he added. "That's especially true for atoll countries, they've got nowhere to run."
Concretely, AOSIS is calling for use of a multidimensional vulnerability index (MVI), and not just economic growth, within the workings of global finance.
"It's a tool," Luteru said. "We're not saying it should or will replace gross national income (GNI)," another standard measure of a country's ability to produce and earn. "It's a complement."
- All possibilities -
One of the measures on the table at the summit will be an international tax on carbon emissions from the shipping sector. A consensus in Paris could shape the outcome of a critical meeting in two weeks of the International Maritime Organisation (IMO).
"We should look at all the possibilities," Luteru said.
"For our small island developing states, shipping is critical in terms of both exports and imports as well, so we will need to look at that very carefully."
Beyond the financial issues, AOSIS's central goal has been the rapid reduction of greenhouse gas emissions, which remain at or near record levels.
Luteru points a finger both at advanced and major emerging economies -- the world's biggest carbon polluters: China, the United States, Saudi Arabia, the European Union, Brazil, and others.
"That's where we can make a huge difference," he said. "Eighty percent of global emissions come from G20 nations."
According to the UN's climate science advisory panel (IPCC), sea levels rose by between 15 and 25cm (six to 10 inches) from 1900 to 2018, and are set to rise by a further 43cm by 2100 in a world that warms by 2C.
The next major international climate conference, COP28, will take place in Dubai in December.
The incoming COP president Sultan Al Jaber, has come under fire because he is also head of United Arab Emirates national oil company ADNOC, with many green groups and some western legislators saying his role as a fossil fuel executive is a conflict of interest.
But the bloc of island states -- some of which support a fossil fuel non-proliferation treaty -- see this as an opportunity.
"Sometimes it's not about engaging only with those who share your perspective," said Luteru.
jmi/mh/klm/pvh
Julien MIVIELLE
Wed, June 21, 2023
Two local residents wade through flooding caused by high ocean tides in Majuro Atoll, capital of the Marshall Islands (GIFF JOHNSON)
Small island states sinking under rising seas are encouraged by a summit starting Thursday charged with revamping the global financial system to better cope with climate change and other 21st-century challenges, their representative to the talks told AFP.
The two-day summit in Paris, hosted by France, "is very good news because it fits well with what we are trying to do", Samoa's Fatumanava Pa'olelei Luteru, chair of the Alliance of Small Island States (AOSIS), told AFP in an interview.
Sea levels sure to rise well into the 22nd century and cyclones made more deadly by global warming have put AOSIS' 39 low-lying island and coastal states on the front lines of climate impacts and UN talks.
Lacking political clout, they used moral persuasion in pushing the world to adopt the 2015 Paris Agreement's aspirational target of capping global warming at 1.5 degrees Celsius, since adopted as a near universal goal.
Today, these and other developing countries that have barely contributed to the problem -- but whose economies are shrinking as a result -- want access to international financial support to be based not just on economic criteria, but also on vulnerability.
"If a cyclone comes, it doesn't differentiate, it doesn't know if you're low-income, middle-income country or even a high-income country," said Luteru.
"It will set back your development years," he added. "That's especially true for atoll countries, they've got nowhere to run."
Concretely, AOSIS is calling for use of a multidimensional vulnerability index (MVI), and not just economic growth, within the workings of global finance.
"It's a tool," Luteru said. "We're not saying it should or will replace gross national income (GNI)," another standard measure of a country's ability to produce and earn. "It's a complement."
- All possibilities -
One of the measures on the table at the summit will be an international tax on carbon emissions from the shipping sector. A consensus in Paris could shape the outcome of a critical meeting in two weeks of the International Maritime Organisation (IMO).
"We should look at all the possibilities," Luteru said.
"For our small island developing states, shipping is critical in terms of both exports and imports as well, so we will need to look at that very carefully."
Beyond the financial issues, AOSIS's central goal has been the rapid reduction of greenhouse gas emissions, which remain at or near record levels.
Luteru points a finger both at advanced and major emerging economies -- the world's biggest carbon polluters: China, the United States, Saudi Arabia, the European Union, Brazil, and others.
"That's where we can make a huge difference," he said. "Eighty percent of global emissions come from G20 nations."
According to the UN's climate science advisory panel (IPCC), sea levels rose by between 15 and 25cm (six to 10 inches) from 1900 to 2018, and are set to rise by a further 43cm by 2100 in a world that warms by 2C.
The next major international climate conference, COP28, will take place in Dubai in December.
The incoming COP president Sultan Al Jaber, has come under fire because he is also head of United Arab Emirates national oil company ADNOC, with many green groups and some western legislators saying his role as a fossil fuel executive is a conflict of interest.
But the bloc of island states -- some of which support a fossil fuel non-proliferation treaty -- see this as an opportunity.
"Sometimes it's not about engaging only with those who share your perspective," said Luteru.
jmi/mh/klm/pvh
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