The increasing carbon emissions and loss of biodiversity have created a huge imbalance and become one of the most serious threats to the existence of mankind. The vagaries of human-induced environmental hazards spare no one. The vulnerability of the socially and economically weaker sections is increased by their status, but this does not necessarily mean that the more privileged are likely to be. It calls upon the privileged few to think and implement innovative finance solutions to tide over the crisis.
Recent commitments on climate and biodiversityA Loss and Damage (L&D) Fund was established at the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) summit in November in Sharm-El-Sheikh, Egypt. The Fund, as its name suggests, is proposed to assist developing countries that are ‘particularly vulnerable’ to the adverse effects of climate change and have suffered losses. However, the finer details are yet to be negotiated. Nevertheless, it is doubtful that the promises made will be fulfilled. History is replete with failed promises. For example, rich countries did not meet an annual $100 billion commitment made at the 2009 Copenhagen summit to support developing countries in addressing the effects of climate change.
The 15th Conference of the Parties on Biodiversity COP, held in Montreal in December, resulted in a global commitment to increase international financial flows from developed countries to developing countries by at least $30 billion per year by 2030. Some members also committed to raising at least $200 billion. Biodiversity-related funding from public and private sources each year until 2030. But again, there is no clear roadmap for doing so. Vague communication creates doubts about the completion of goals, which is why we need innovative agnostic solutions with a clear implementation strategy that is free from political upheavals.
Creating a Fund for Environmental Improvement and Innovative FinanceWhile COP27 saw several countries expressing interest in exploring ‘innovative sources’ of finance, nearly six months later, these sources are yet to be identified or drawn up. The G20 Bali Leaders’ Declaration in November also called on member states to unlock innovative sources of financing to support the achievement of the Sustainable Development Goals (SDGs) in low- and middle-income countries. The announcement prompted multilateral development banks to mobilize additional financing to address global challenges. However, no substantial progress has been observed in identifying such exact solutions. The G20 summit in India is expected to go beyond mere talk and come out with a concrete plan, as indicated by its Sherpa Amitabh Kant at the CUTS event on Sunday. “We need innovative finance solutions to tackle climate change, which could include blending finance and co-financing with the private sector,” he added.
Several funds have been created over the past 30 years with various commitments. Green Climate Fund, Adaptation Fund and Special Climate Change Fund, to name a few, to support global climate and environmental financing efforts. But, the gap between needs and commitment still exists and is widening.
Discussion on various proposals like Global Carbon Tax, Digital Services Tax, Property Tax, Airplane Tax, Cess on Carbon Emissions, Biodiversity, Climate Resilience and Climate Adaptation, Financial Transaction Tax etc. to create a comprehensive fund for the restoration of the planet Its being done. Together these can be a good bouquet to create a fund of funds to tackle both climate and biodiversity issues.
Providing meaningful financial solutions is intrinsically linked to our efforts to prevent a backslide to the goals set out under the SDGs. SDG 13 (which includes climate action) calls on states to take urgent action to combat climate change and its impacts. Similarly, SDG 15.5 calls for urgent action to reduce habitat degradation and prevent biodiversity loss.
Holistic Approach – Involving Other StakeholdersPrivate capital financing has an important role to play in bridging the global sustainable financing gap, especially in emerging markets and developing economies where governments are constrained by a lack of capacity. Increasing the scale of private capital funding in sustainability initiatives could help attract billions to invest in a host of initiatives. There is a need to create an ecosystem that encourages the creation of financial assets that can contribute towards emissions reduction and biodiversity conservation goals. Although private capital funding has increased over the past decade, it needs to increase significantly if the world is to meet the agreed targets.
conclusion: As the side effects of climate and biodiversity loss take a toll on the planet and mankind, the world urgently needs a comprehensive framework that is transparent, verifiable, agnostic and accountable. The goals set by the international community can be met only if it follows through with the timely allocation of necessary funds, which would require exploration of various resources through a bouquet approach. As we face a race against time to leave a cleaner and greener world for future generations, the delivery of critical action should not only be adequate, but also timely.
Pradeep S Mehta is the Secretary General of CUTS International. Jayesh Mathur of CUTS contributed to the article.
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Updated: May 30, 2023, 12:18 AM IST