How are we going to fund it all? COP26 dedicates day to finance for adaptation and mitigation

A session on innovative funding proved popular at this year’s Flood and Coast 2021 virtual conference, and it’s small wonder.

In many of the conversations surrounding preventative actions on climate change, the question of where the cash is actually going to come from to translate rhetoric into reality looms somewhere in the background.

Do we rely on funding filtering down from central government initiatives such as Defra’s recent Flood and Coastal Resilience Innovation Program – read more about how CIWEM supported Barnet’s successful bid for a slice of this funding here – or on private sector firms to lean into their CSR policies to invest their pounds into making the planet a better place to live in?

And is there also a place for people power to be thrown into this mix with communities leveraging the power of collective bargaining to fund PFR tools and more? Something that was also discussed in the aforementioned Flood and Coast 2021 session.

The above and more is likely to be thrashed out on finance day, taking place on Wednesday November 3rd during week one of COP26 – see the full COP26 programme here.

But what are the COP26’s presidency’s hopes for private and public finance for adaptation and mitigation?

On the COP26 website they write about their ambition ‘that every financial decision needs to take climate into account’.

Why is this important? The Office of Budget Responsbility's (OBR) recent fiscal risks report sums up the argument succintly.

'The costs of failing to get climate change under control would be much larger than those of bringing emissions down to net zero.

'Our stylised unmitigated warming scenario shows debt spiralling up to around 290 per cent of GDP thanks to the cost of adapting to an ever hotter climate and of more frequent and more costly economic shocks (as the spillovers from increased conflict and mass migration are added to the cost of more extreme weather events). Viewing the costs of achieving net zero in this context, it is clear the net benefits of a successful global response would be huge.'

For private finance the above includes all banks, insurers, investors and other financial firms committing to ensuring their investments and lending is aligned with net zero and central banks and regulators working to ensure our financial systems can withstand the impacts of climate change and support the transition to net zero.

And when it comes to public finance this includes a call for climate finance providers to ‘renew their focus on unlocking private sector investment particularly for new low carbon technologies, adaptation and resilience solutions and regions which attract less private capital’.

Interestingly ‘improving the gender-responsiveness of climate finance’ is also listed as a COP26 priority for public climate finance.

This recognises that climate change ‘has a disproportionate impact on women and girls’ and calls on multilateral climate funds, multilateral development banks (MDBs), development finance institutions (DFIs) and other major donors to work to address these gaps.

Keep visiting ciwem.org for more news and updates on COP26.