Warsaw Participants Discuss ‘Developing Countries in the Driving Seat for Accelerating Green Finance’
16 November 2013: Franz Perrez, Ambassador for the Environment, Switzerland, and Anton Hilber, Swiss Agency for Development Cooperation, Federal Department of Foreign Affairs, welcomed participants to a side event on 'Developing Countries in the Driving Seat for Accelerating Green Finance' and introduced the report 'South-Originating Green Finance: Exploring the Potential,' highlighting that it is a result of the Geneva Dialogue on Climate Finance and associated processes.
Panel moderator Simon Zadek, International Institute for Sustainable Development (IISD), outlined the main outcomes of the report. He said these include: developing-country sourced green finance for renewable energy is on the rise; private financiers from developing countries perceive political and country risk differently; and policy levers specific to developing country-sourced finance are non-existent.
Monique Barbut, Executive Secretary, UN Convention to Combat Desertification (UNCCD), identified that out of the US$182 billion invested in climate finance in 2011, US$131 billion came from internal sources. She said this money is generated through domestic policy, such as approaches that leverage private sector investment.
Nick Beglinger, Chief Executive, Swiss Cleantech, said it does not matter so much where the finance comes from, stressing that pension funds are ideal long-term investors and that the right framework conditions are required in order to ensure investment.
Nick Robins, HSBC Climate Change Centre, emphasized that south-south flows are very interesting, highlighting an investment by the Brazilian Development Bank in Johannesburg, South Africa, in bus rapid transit.
Zaheer Fakir, Department of Environmental Affairs, South Africa, said the money flows demonstrate that people in the south are more keen to act on climate change and put their money where their mouth is. Stressing leadership entails translating vision into actions, he said it should be about motivating people to change.
Hilber noted the establishment of the private sector facility under the Green Climate Fund (GCF). He said the report stems from the desire to further learn about how the private sector can function in the green investment space, underscoring the desire to “crowd-in” private investors.
During discussions, participants addressed how to “unlock” institutional investors, the issue of investment risk, investment on the basis of future benefit, improvement of relationships between the international financial system and governments, and how to address the “squeamishness” the public sector feels for subsidizing private sector investment in climate finance.
Beglinger said that in the end the discussion has to move from niche to mainstream, noting it is not an issue of subsidization but of changing the fundamentals, such as shifting framework conditions in order to reduce risk.
Hilber called for private sector actors to join the GCF private sector facility advisory group, noting that the GCF aims to operate at-scale in a more programmatic rather than a project-based approach. [IISD RS ENBOTS coverage and video of side event]