Supporting the Momentum of Paris: A Systems Approach to Accelerating Climate Finance
Systems thinking approaches provide the potential to identify and measure how international public climate finance actors can interact:
- With each other, given their own perspectives and constraints on what they can do, their future direction of travel, and direction of their peers.
With developing country financial systems, given emerging trends in green finance across the developing world, potentially unlocking new sources of finance.
The systems approach frameworks developed in this project offer methods to enhance coordination and collaboration among actors both within the international public climate finance system, and during design of interventions within developing country contexts.
The graphic overleaf provides an overview of needs and gaps drivers across developing countries, against the drivers of public finance actor perspectives.
1. While specific systems and needs are best evaluated on a country by country basis, short-ter- mism, growing risks and volatility are prevalent across developing country financial systems,impacting currency risk evaluation and potential public support for climate policies.
2. Access to finance, the costs of and suitability of current financial products, and lack of tools and methods to enact low carbon and climate resilient projects remain the key barriers to climate finance growth. Political and policy risks in the domestic environment are also cited as a key barrier to address in supporting private finance solutions.
3. The most prevalent instruments and solutions identified include blended or structured finance vehicles, utilising concessional finance; de-risking instruments such as guarantees or insurance; the provision of data and tools to manage uncertain risks; and policy support and technical assistance to reduce or manage political risks.
However, while such solutions are commonly called for, delivering them at scale require some of the major public finance actors in climate finance to adapt and change business models.