By Gift Briton
New investment initiatives to mobilize private climate funding globally will be introduced at the ongoing 29th session of the United Nations climate change Conference of Parties (COP29) in Baku, Azerbaijan.
Among these is a blended finance facility in West Africa to attract local currency investment from private investors for renewable projects like mini-grids.
The initiative is part of the British International Investment (BII)’s ongoing efforts to encourage private investors to commit capital to countries most vulnerable to the climate emergency.
Over the past decade, BII has spearheaded innovative projects to engage private investors in climate finance across vulnerable countries.
Increasing private sector finance for climate action has historically been challenging. Many private investors, despite collectively managing trillions of dollars in assets, remain reluctant to commit capital to climate finance in emerging economies because of the perceived level of risk that such investments entail.
Factors such as local currency volatility, political instability and regulatory restraints are often cited as embedded reasons for not investing in countries that are most vulnerable to the impacts of the climate emergency.
Leslie Maasdorp, Chief Executive Designate at BII, encouraged private investors to engage with development finance institutions (DFIs), explore these mitigated opportunities, and envision the progress achievable by COP30.
“BII and other DFIs are innovating to de-risk investments and provide opportunities for private institutions to allocate capital where it is needed most,” Maasdorp noted.
The United Nations Conference on Trade and Development estimates that developing economies need between $3.3 trillion and $4.5 trillion in annual investment to meet their Sustainable Development Goals. But at current financing levels, it says there is an annual financing gap of some $2.5 trillion.
During COP29’s opening on November 11, 2024, UN Climate Change Executive Secretary Simon Stiell highlighted the critical nature of the conference to “address the rampant climate crisis, and to credibly hold each other to account to act on it.”
“We must agree on a new global climate finance goal. If at least two-thirds of the world’s nations cannot afford to cut emissions quickly, then every nation pays a brutal price. So, let us dispense with the idea that climate finance is charity.”
He added, “An ambitious new climate finance goal is entirely in the self-interest of every single nation, including the largest and wealthiest. But it’s not enough to just agree on a goal. We must work harder to reform the global financial system. Giving countries the fiscal space they so desperately need.”
