Finance through the equity lens

With negotiations for a draft ADP  text entering their third day, the debate on equity is surely heating up. This is the moment to ensure that an important aspect of effort sharing is on the agenda: the equitable provision of finance and other means of implementation – especially to the most vulnerable.

As a number of Parties noted  this week, equity must apply to all pillars of international global climate response. In contributing their fair share of the global effort, developed countries need to both control their own emissions and support further mitigation through the provision of climate finance, by helping poorer countries implement their low-carbon development strategies.

Does this mean that wealthier countries can buy their way out of making substantial emissions reductions at home? Sorry Japan, it most definitely does not. To close the emissions gap we must make every possible effort to reduce emissions within our borders. Period.

But, what about the global adaptation effort, you ask? Who pays for that? Given the neglect of adaptation finance in favor of mitigation, it is more important than ever to ensure that countries also make a fair contribution to the adaptation challenge. There is a core equity element here: the polluter pays principle.

And whether it amounts to increasing the flow of funds, sharing  risks, or both, a new international mechanism to address loss and damage will  become another element in the overall contribution to addressing climate change.

No one ever said that fixing the climate crisis or resolving the all-important equity challenge would be easy. Right now we face a situation of profound inequity. Those with the least responsibility for climate change are suffering its impacts the most. The efforts of some of the poorest nations are in many cases trumping those of the big emitters. Parties should agree on a small but robust set of quantifiable equity indicators that capture these principles and help guide parties in forming and reviewing their commitments. That list should include adequacy, responsi- bility, capability, development needs and adaptation needs.

There’s one more disturbing trend this week – the overwhelming preoccupation of certain Parties with private finance, at the expense of putting any serious effort into scaling-up public finance. Of course we recognize that the private sector has an important role to play in meeting the challenges of climate change. But let’s be clear – private finance pays little attention to equity. By its very nature, it goes where money is to be made.

We already know that private climate finance flows largely to the wealthier developing countries because they are more capable of attracting and absorbing investment. And we know that private finance favors mitigation activities over adaptation. For example, a seawall or a community-based adaptation program, might be vital to an area’s very survival, but it simply won’t offer the short-term return on investment that private investors demand.

In short, private climate finance just can’t meet the mounting adaptation needs of poor and marginalized people across developing countries. Neglecting public finance risks widening an already unacceptable equity gap even further. Urgent efforts to scale up public finance and rebalance flows between adaptation and mitigation are important steps on the road to a fair and ambitious new climate agreement. So is establishing, through the Green Climate Fund, a strong multilateral climate finance regime, in which funds are distributed in accordance with a country-driven approach that ensures the needs of vulnerable communities are prioritized.

So there you have it, Ministers. When you jump head first into the finance debate, bring your very best concrete ideas on how to operationalize equity within.

Related Newsletter :