Finance
Climate finance refers to both public and private financing that is deployed to support mitigation and adaptation actions. It is very important because of the need to fund the development of the infrastructure we need to transition to a greener and more climate-resilient economy. Similarly, there is a real urgency to fund technology and innovations whilst also helping companies to realign their business models to a net zero position.
The 2015 Paris Agreement called for financial assistance from richer countries with more financial resources to those that are less endowed and more vulnerable. This recognizes that the contribution of countries to climate change and their capacity to prevent it and cope with its consequences vary enormously. COP26 in Glasgow, has set a clear objective for private finance to be mobilised and ensure that every professional financial decision takes climate change into account.
This sits alongside the opportunity to invest in green and resilient strategies during the recovery from COVID-19; a theme that is likely to be prominent alongside enhancements in reporting and risk management.
How can financing models unlock climate mitigation opportunities?
Ioannis Gkrimpizis, a Gleeds cost specialist on the Autoridad para la Reconstrucción con Cambios (ARCC) programme in Peru, explores how to build a ‘green' financing model for climate mitigation and how goverment-led investment delivers ‘best value’ locally.
How digital programme management is helping Peru fight climate change with financial responsibility
Innovation in digital delivery is enabling Gleeds to achieve so much more in Peru. Bisrat Degefa, who leads Gleeds’ digital capability in Peru, explains how his work is supporting the Peruvian government in the rollout of financing for over 11,000 projects, while ensuring project transparency and accountability.
Green financing: a global perspective
How can the financial challenges of achieving net zero be overcome? Read on for important insights on how the global net zero economy will be funded and the role of financial institutions in making it happen.
Financing a net-zero future
Published in October 2021, the World Economic Forum produced a report that argues to reduce greenhouse gas emissions and achieve a net-zero future, a very significant increase in private capital flows is needed to “deploy, validate and expand technologies in the next decade”. It goes on to say that “individual stakeholder action will not solve the potential market failures, resulting in significant investment gaps”. By proposing an initial set of financing approaches and de-risking solutions, this report seeks to inform a debate on how to rapidly accelerate the deployment of capital towards breakthrough technologies to fight climate change.
Untying the climate funding knot
Taking a different approach to the same challenge, Chatham House published an October 2021 insight piece that places focus on the fact that to date climate finance has not flowed at anywhere near the speed required. In 2015, donor countries recommitted to “mobilize $100 billion each year for climate finance in developing countries by 2020. In 2017-2018, it had reached an average of $59.5 billion a year”. Whilst a substantial sum, in reality the funding is governed by a number of institutions with different rules and is notoriously difficult for countries with low institutional capacity to access.
Removing the obstacles that exist
Shifting to a UK focus, the 2020 Road to Net-Zero report was published by the Climate Change Committee to accompany its Sixth Carbon Budget. It critically assesses the UK financial system’s ability to deliver a Net Zero target. It recognises that the coming decade is critical and the challenge is very significant but with clear policies and focussed effort, the potential to drive the necessary change is there. The report notes that “the depth of the UK’s capital markets along with its growing expertise in sustainable finance means that this significant ramp-up in the scale of investment is eminently deliverable. But it will mean being resolutely focused on removing the obstacles that exist”.
A Just Transition
Of course the transition to a Net Zero economy has the potential to create social and societal impacts. Published in October 2021, the ‘Financing a Just Transition Alliance’ sets out what the delivery of a just transition in the UK will require. It highlights initial efforts by leading financial institutions towards achieving a just transition, and points to what is needed to achieve system-wide change. While the Alliance and this report focus on the UK, the report also draws out implications and possible applications for the international context. The report particularly focuses on the potential for “reallocating capital to achieve net-zero greenhouse gas emissions can also drive more and better-quality jobs, revitalise communities and reduce inequality in the UK, linking the just transition and levelling-up agendas”. It also calls for financial institutions to “play a significant role by fully integrating the environmental and social dimensions of the transition into their policies and decision-making”.
Climate change a bigger challenge for construction than covid
In an article published earlier this year, Chris Soffe, a member of the Gleeds supervisory board, highlighted how climate change is no longer an afterthought for those working in the built environment.
"As a past president of the CIOB and someone with over 50 years’ experience working in construction management worldwide, I am witnessing an evolution at the moment.
"I use the term evolution rather than revolution deliberately, for it is slow, deliberative and measured but it is change. I am seeing what some are calling a “white swan” moment, where our actions as a sector are under the microscope like never before and, as the ING survey shows, coordinated action and convergence on areas such as ESG standards and policy are being seen as essential for accountability and enabling these new targets to be reached."
Reproduced with the kind permission of Construction News.
Thank you to the ARCC for permission to use their photos and video.
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