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Green Climate Fund’s Rallying Call To Private Sector

The recently concluded Green Climate Fund Private Investment for Climate (GPIC) Conference brings into sharp focus the valuable role of the private sector in enabling countries to reduce and better manage climate risks. Speaking at the 6th GPIC Conference, Executive Director of the Green Climate Fund (GCF), Ms. Mafalda Durate made an impassioned plea for the private sector to scale up its investment given its fundamental role in the mobilisation of climate finance as the public sector cannot accomplish the mammoth task of utilising the available funds.

From Investment To Impact

“We cannot meet our ambition, our climate goals, and the Paris Agreement if we do not mobilise the private sector”, said Durate. This comes in the wake of trillions of dollars in investments that remain immobilised, amid the rising climate crisis. The 6th GPIC, therefore, sought to address strategies to accelerate private finance for climate actions. “Investors and developers have an unparalleled capacity to deliver the finance needed to create new markets and spur innovations across all sectors. But we know that to unlock this potential, we need to address key barriers and risks”, Durate continued.

Ms. Mafalda Durate - Executive Director, Green Climate Fund

Among the challenges cited by the private sector were higher perceived risks, lower perceived returns, and uncertainty about real impact. Of the US$15.3B in total investments, only US$4.5B (29%) goes to the private sector. In making a case for private sector uptake, she emphasised the support from the GCF that addresses key barriers faced by the sector.

“The flexibility of the…GCF…makes it uniquely placed to catalyse investment…provide grants, loans, and equity guarantees along the entire spectrum of a financial toolkit…The GCF can work with institutions that other financial institutions are not necessarily working with or are not too well placed to work with,” Durate concluded.

The urgency to protect the climate from the impacts of the rapid onset of climate change was echoed in the words of Ms. Alexia Latortue, Assistant Secretary for International Trade and Development in the United States of America’s (USA) Department of Treasury. As co-chair of the GCF, along with Pakistan, the USA lauded the GCF for its efforts in creating the enabling environment for private sector investment and making its mark as a critical part of the financial architecture.

Ms. Alexia Latortue - Assistant Secretary for International Trade and Development, United States of America’s Deprtment of Treasury

“The GCF has made strides in increasing access to finance…and mobilising private finance,” according to Latortue. The application process timeline has been reduced to 11 months from 26 months with a simplified application process. It was, therefore, up to the private sector to mobilise private finance and increase the capacity of the domestic market to absorb finance. There are opportunities for the public sector to mainstream climate into domestic financial systems where countries will have the tools needed to finance priorities and raise climate ambition.

“The Blue Green Bank (BGB) in Barbados is a fantastic example. It will leverage limited public funds to finance domestic priorities and to work with domestic institutions, banks, credit unions insurance companies, to teach them to do the same. That’s sustainable finance.” Latortue said.

The BGB will deliver funds, guarantees, and other financial products to support existing financial ecosystem that facilitates blue/green climate-responsive programmes aligned to Barbados’ Nationally Determined Contributions (NDC).

GCF’s Leadership Role

Doubling down on the GCF’s openness, readiness, and risk appetite, Ms. Jacqueline Novogratz, Founder and Chief Executive Officer (CEO) of GCF-Accredited entity, Acumen; emphatically posited that there is a great need for more financial institutions willing to take risk and provide concessional capitals and grants for transformative impacts.

“The GCF is willing to take that first loss, provide that guarantee, co-create, enable grants to bring in other partners – recognising we can’t do this alone.”
Ms. Jacqueline Novogratz - Founder and Chief Executive Officer, Acumen

The GPIC was hosted by the GCF in Nairobi, Kenya on September 4 and 5, 2023, and brought together over 450 investors, developers, and financiers from over 60 countries.

The GCF was established by the United Nations Framework Convention on Climate Change (UNFCCC) to support global climate action, by promoting a low-emission and climate-resilient transition in developing countries through transformative, country-owned initiatives. GCF is the largest multilateral dedicated climate fund and serves the Paris Agreement, supporting developing countries in reaching their nationally determined contributions (NDCs) to keep global temperatures below 2. Through its Private Sector Facility (PSF), the GCF aims to change the current paradigm by de-risking the delivery of private capital and scaling up private sector investment flows.

Photos courtesy of the GCF.


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