AM2023: Upgrading International Finance, Development & Trade

In the midst of spiraling polycrisis, with every region of the world setting heat records and dozens of countries facing debt distress, the World Bank and IMF are meeting in Marrakech to consider resilience-oriented reforms.

There is hope we will see a rebalancing of development assistance—to better account for climate-related vulnerabilities and to unlock more robust, innovative, cooperative investments in sustainable, inclusive, and resilience-building development.

The COP22 in Marrakech set in motion the greening of capital markets in Africa, advanced discussions around central bank cooperation to support climate-resilient fiscal policy, and included the launch of the Resilience Intel initiative, a Citizens’ Climate-led effort to create conditions for a transition to 100% climate-smart finance.

The World Bank has laid out an Evolution Roadmap:

“centered around the need to become a ‘better and bigger bank’ that is fit-for-purpose to respond to the most pressing needs of people and the planet.”

In April and July, volunteer stakeholder advocates from the CCI network submitted letters to their respective regional or national Executive Directors, outlining a list of principles and priorities for ensuring better outcomes for people in communities. As part of the Evolution Roadmap Consultation Process, CCI submitted a formal list of recommendations, which can be found on our Blue Notes site at cciblue.com/evolving.

We distilled a longer list of asks into four main areas of focus:

1. Invest to support the health of all human beings and all of nature.

2. Recognize human rights, and don’t punish the vulnerable.

3. Support multilateral cooperative arrangements to accelerate integral human development.

4. Include stakeholders in design, delivery, and tracking of development finance.

All of this is taking place amid an ongoing global debt crisis, in which vulnerable countries see investment depleted, borrowing power erased, and costs and stresses from degraded climate conditions accelerating. Increasingly, we see economic projections in a climate-stressed world showing significant reductions in GDP, even in wealthy countries, by mid-century.

Given that we organize our mission at CCI around the principle that “A livable future is a human right”, we ask that international financial reforms be conducted in line with the stark scientific findings of the IPCC’s 6th Assessment Report (AR6). Specifically, the report finds that the 1.5ºC threshold is likely to be crossed before 2040. Chapter 4 states:

In the near term (2021–2040), a 1.5°C increase in the 20-year average of GSAT, relative to the average over the period 1850–1900, is very likely to occur in scenario SSP5-8.5, likely to occur in scenarios SSP2-4.5 and SSP3-7.0, and more likely than not to occur in scenarios SSP1-1.9 and SSP1-2.6.

Chapter 4 also finds that overshooting 1.5ºC will make it harder to achieve climate-resilient development, even if the overshoot is partially reversed through carbon drawdown. Chapter 4.6.2 reads, in part:

Overshoot has been found to lead to irreversible changes in thermosteric sea level (Tokarska and Zickfeld, 2015; Palter et al., 2018; Tachiiri et al., 2019), AMOC (Palter et al., 2018), ice sheets, and permafrost carbon (Sections 4.7.2 and 5.4.9) and to long-lasting effects on ocean heat (Tsutsui et al., 2006)

This means critical regulating structures within the climate system may be lost, increasing the prevalence and cost of devastating impacts, and making it harder to restore a livable climate, even if we learn to reabsorb all industrial, agricultural, and transport emissions. To avoid this, we need to see rapid global realignment of investment priorities across public, private, and multilateral finance, to:

• Transition energy systems and heavy industry, shipping, and infrastructure to systems that do not generate global heating pollution;

• Foster cooperative investment in climate-smart food systems that significantly reduce global heating pollution from food loss and waste, and from standard practices in management of land, water, and livestock and support multistakeholder financing arrangements and green budgeting that investment effectively in protection and restoration of nature;

• Create new integrated data systems, which materially connect Earth systems science information with financial data and other widely used performance metrics, and include practical, localized information drawn from a participatory Capital to Communities model of climate finance design and delivery;

• Acknowledge and leverage the role of climate-smart trade—trade that is successful in a climate-stressed world—to support mainstream investable deployment of innovative solutions that build climate resilience.

The hour is far too late to leave any practical insight unattended, and further injustice and exclusion will just lead to waste, cost, and harm, which could have been prevented. Now is the time to stop wasting future wealth and wellbeing on demonstrably destructive investments; we need to invest in supporting everyone’s access to a climate-smart future.

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Further Reading

1. About Article 6.8 non-market approaches to international climate cooperation

2. Consultation on Priorities for a Livable Future

3. Distributed multi-scale resilience-building finance is urgently needed

4. Earth Diplomacy Leadership Workshops — Register here

5. Evolving World Bank mission and practice to support climate-safe integral human development — notes and priorities from CCI

6. Food, Finance & Democracy Project

7. Good Food Finance Facility — a co-investment platform for food systems transformation

8. Integrated Data Systems Initiative — 5-year sprint to deliver mainstream multidimensional metrics

9. NDC Collaborative — stakeholder engagement to enhance national climate action strategies

10. PARIS Principles to Accelerate Cooperative Climate Resilience