The integration of climate change by public and private financial institutions: recent progress and the challenges ahead  

Date: 4th December, 5.15pm – 6.45pm
Location: Générations Climat – Room 5
Organizers: Agence Française de Développement & I4CE

Introduced by the testimony of a developing country which has actively integrated climate change in its development planning for several years, this side-event will foster a high level dialogue between representatives of the public, private, national and international financial sectors. This dialogue will present progress on the integration of climate change by these institutions, and notably the intensive work undertaken on the harmonization of practices (especially regarding climate finance tracking and GHG methodologies) and on raising the ambition (2014 climate finance figures and commitments taken in the run-up to COP21).

I4CE publication series on Mainstreaming Low-Carbon Climate-Resilient growth pathways into Development Finance Institutions’ activities, produced in partnership with the AFD,  can be downloaded here:  https://www.i4ce.org/i4ce-launches-its-publication-series-on-mainstreaming-low-carbon-climate-resilient-growth-pathways-into-development-finance-institutions-activities/

Introduction:
Mr Simon Gaviria, Director of the National Planning Department of Colombia;

High-Level Round Table:
Moderator: Benoit Leguet, Managing Director, I4CE – Institute for Climate Economics

• Mrs Anne Paugam, CEO of AFD and Vice-Chair of IDFC
• Mrs. Laura Tuck, Vice President, Sustainable Development, World Bank Group
• Mr. Jacques Prost, Deputy CEO of Crédit Agricole CIB
• Mr Patrick Dlamini, CEO of Development Bank of South Africa (DBSA) and Vice Chair of IDFC.

The International Development Finance Club (IDFC) is a network of 23 major international, regional and national development banks.

Event Summary:

At COP21 on the 4th of December 2015, I4CE-Institute for Climate Economics and the Agence Française de Développement (AFD) convened a high-level round table to discuss the progress made to date by public and private financial actors to integrate climate change into their operations.

Moderated by Benoît Leguet, Managing Director of I4CE, the round table brought together top and senior-level representatives from three public financial institutions with different mandates and scopes of intervention as well as a private bank active in the area of international project finance.

• Anne Paugam, CEO of AFD and Vice-Chair of IDFC (International Development Finance Club) addressed the question of the integration of climate change from the perspective of a bilateral finance institution and progress made within the broader IDFC network of institutions. In 2014, the institutions making up the IDFC dedicated 85 billion USD of finance for climate-related actions – and continue to make this a priority and work collaboratively to harmonize tracking methodologies and share best practice. Concretely, the AFD plans to increase its financing for activities with climate co-benefits with an objective of 5 billion EUR per year by 2020 – or close to 50% of its activity. Through this, the institution hopes to triple its current levels of financing for adaptation by 2020.

• Laura Tuck, Vice President, Sustainable Development, the World Bank, described how multilateral development banks (MDBs) are addressing the climate challenge. She emphasized that MDBs already have an important role – channeling in 2013-2014 close to 40% of North-South climate finance flows or approximately 27 billion USD per year. The World Bank has increased its commitment looking to dedicate 28% of its activities to supporting climate projects. Beyond direct financing, Ms. Tuck reiterated the role of development finance institutions to support new asset classes such as green bonds, citing recent work to improve impact reporting. Furthermore, the WB has worked with IDFC members as well as other institutions to harmonize greenhouse gas quantification methodologies to find a common approach to assessing the impact of projects, particularly in the energy efficiency and renewable energy sectors. Common ‘principles’ are also being endorsed for undertaking GHG accounting in the transport sector.

• Jacques Prost, Deputy CEO of Crédit Agricole CIB shared views from the perspective of a private bank involved internationally in project finance. He emphasized how his institution has respected the commitments that it has made in the past of structuring close to 20 billion EUR of climate-related deals per year – overshooting this objective by 5 billion EUR in 2015. Furthermore, private finance institutions are taking action to help develop different asset classes, such as CA’s involvement in some of the largest green bond issuances – as well as commit to limiting their involvement in certain types of investment such as no investment in coal mines nor new coal fired power plants in high-income countries.

• Mr. Mohale Rakgate, General Manager of the Green Fund/Project Preparation of Development Bank of South Africa (DBSA) – spoke on the behalf of Mr Patrick Dlamini, CEO of DBSA and Vice-Chair of IDFC. He gave the perspective of a local public infrastructure development bank in an emerging economy. DBSA is active in the areas of energy infrastructure, transport and energy efficiency – looking to support projects with additionality and scalability to involve other public and private financers. DBSA recognizes the challenge, but also the importance, of linking climate and development objectives. Mr. Rakgate spoke about two programs that DBSA manages for the South African Government: the national Green Fund targeting demonstration projects and the national Renewable Energy Fund aiming to facilitate the rollout of project to increase the country’s renewable energy capacity. Mr. Rakgate also spoke on how institutions such as DBSA are important to help channel international finance to projects, citing their recent accreditation to the Global Environment Fund and expected accreditation to the Green Climate Fund next year.

The presentations of the four representatives was followed by an exchange with the public including questions on agriculture, support for research and innovation, ensuring the environmental integrity of instruments and interventions as well as climate and development objectives and be further linked moving forward.