MFF-COP28 Reflections

Reflections from COP28

How can we make financial commitments a reality?

‘There is no path to fulfilling the Paris Agreement and keeping 1.5 degree Celsius within reach without protecting and restoring nature, land, and the ocean.’ – Razan al Mubarak, UNFCCC High-Level Champion at COP28

Putting climate and nature on the agenda at COP28

At COP28 in December, a joint statement released by the presidency and the Convention of Biological Diversity (COP15) on nature, climate and people recognized that the synergy between climate and nature is key to increasing resilience and securing sustainable livelihoods, whilst simultaneously calling for scaling finance and investments for climate and nature from all sources. This sentiment was echoed in the first Global Stocktake, which affirmed the need to tackle climate and nature in an integrated way for powerful mitigation benefits. Completed every five years, the Stocktake is party-driven and part of binding international law under the Paris Agreement, and allows policymakers to evaluate where they can strengthen their commitments and policies to accelerate further climate action.

Overall, acting on climate change in an ‘ambitious, integrated, and synergetic manner as stated in the recent joint statement by COP15 and the COP28 presidency requires major efforts from a constellation of actors to scale up investments in the forest and sustainable land use (FSLU) sector. DFIs and blended finance solutions have an important role to play in ensuring that the commitments made at the latest COP are implemented.

Unlocking finance to make good on promises for nature and climate

Financing commitments hold little weight unless concrete implementation plans are drawn up and financial actors become empowered to deliver them. As the climate crisis grows, countries are pledging increasingly ambitious financial commitments to keep in line with the Paris Agreement. However, translating these commitments into action continues to be a challenge. This is exemplified in the case of the Democratic Republic of Congo (DRC), where the donors during COP26 to protect and sustainably manage the Congo Basin has not been received, compounding the challenges faced to protecting the world’s second largest tropical forest and the communities who call it home. In the first year of waiting for this promised capital the of tropical forest.

According to data from the National Centers for Environmental Information, 2023 was the warmest year since global records began by a wide margin, and 90% of the earth’s population experienced heat boosted by climate change. A drastic shift is needed to combat nature loss more than ever, and increasing both public and private finance flows towards nature-based solutions can make it happen. Applying innovative methods of financing and leveraging various pools of capital, including through blended finance, can help to de-risk and create incentives for the private sector, as well as increase the quality of investments.

However, increasing capital flows is not the only challenge – it must be deployed in the right places in order to deliver for nature and climate. A recent report revealed that global finance flows are regionally, thematically and sectorally imbalanced, with over 75% of the capital raised by developed countries being spent domestically instead of in middle and low income regions where the finance is most needed. DFIs – with their mandates and unique expertise of working in emerging economies – have a key role to play in leading investors into underserved markets where climate and nature finance can have the greatest impact. FMO aims to raise climate ambition and promote nature-based solutions through programmes such as Mobilising Finance for Forests (MFF), which aims to catalyze substantial additional private sector investment specifically into forestry and sustainable land use projects in Africa, Asia, and the Amazon Basin.

To avoid the climate emergency, the emerging recognition of the climate and nature nexus recognised at COP28 must result in action. DFIs, public, private, philanthropies and NGOs need to work together to deploy capital in underfunded countries and sectors, and develop concrete plans ready to be implemented at the scale required to protect and restore nature.

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