COP26 has seen world leaders gathering climate action momentum around mechanisms to deliver climate outcomes, beyond simply pledging money that they then fail to deliver.
Leaders seem to be ready to back up this momentum with some real mobilising of public banks. Now those banks need to step up to deliver. And intriguingly, leaders are getting innovative, and recognising the massive, systemic nature of both the climate threat and the transition.
Some leadership in evidence
Moving into Finance Day, the COP26 World Leaders Summit statements signalled a new political momentum for creating the mechanisms needed to effectively mobilise the global economy to deliver climate outcomes.
The need was inspiringly put by Barbados’s Prime Minister Mia Mottley, saying “… national solutions to global problems do not work.” “… when will leaders lead?” and “… we have come here today to say, ‘try harder, try harder'”.
The way forward was equally inspiringly put by Italy’s Mario Draghi – his “whatever it takes” moment for climate – who put his energy and authority behind bringing together a taskforce to drive the investment needed for climate and development: “We must strengthen our efforts in the realm of climate finance…We must bring together the public and the private sector in new ways.”
One intriguing point was that both leaders spoke about innovative new ways of driving investment in climate and development, referring to the IMF’s role in issuing Special Drawing Rights (its reserve currency). Now, maybe that’s only for the macroeconomy nerds among us, but they are serious people, and this could be game changing.
Some action in evidence too
In follow up meetings at COP26, world leaders set out some clear principles for moving forward the Draghi vision of bringing together, including good technical principles like climate neutrality, good governance and transparency, value-driven, and working in hand with the private sector. But also better political ones, including engaging communities and above all, ensuring it will be led by host countries.
Against that background, it was good the see the practical example of the Just Energy Transition Partnership with South Africa. It was country-led, donor-supported, and it put $8.5bn into a partnership that will put a just transition for fossil fuel workers at the heart of its efforts to decarbonise South Africa’s coal-intensive economy, while also supporting the build-out of new green development pathways in multiple sectors.
And yes, there were more pledges of money, and claims of more money, all of which is good to see. But momentum can only come from practical examples like South Africa’s Just Energy Transition Partnership and other solid platforms to drive the transition, as Draghi envisioned.
We must move past pledges and counting climate money beans. What we need is a taskforce, such as that set out by world leaders, that can deliver on legitimacy and concrete action, and can hold governments to account for delivery.
It needs clear leadership from finance ministers. Ideally one from a developing or emerging market country (such as Indonesia, incoming G20 president) and a developed one (Italy, the outgoing G20 president).
There must be active representation and steering from recipient countries; input from across the G7 and G20; along with the IMF, World Bank, development banks and private sector representatives; and crucially civil society organisations, indigenous peoples and local communities.
It must address both transition and resilience. In that regard, it was heartening to see that the Barbadian PM’s powerful request on adaptation from island states clearly influenced President Biden’s thinking.
While the task force may start around a core on climate and resilience, it needs to not stay there. It can also form the basis of further action on the critical subject of loss and damages, which has lacked climate action momentum to date.
Above all, this must provide coherence and connect the existing initiatives, Build Back Better World, Clean and Green Initiative, Global Gateway, and can form a bridge to the Belt and Road Initiative.
We have had lots of pledges of money in the past, but this week, there might be a new climate action momentum to achieve climate outcomes.