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When the COP27 summit was kicked off in Egypt in November last year, there was hope that some progress would finally be made in financing climate action. But Hao Zhang, who attended the summit, observes that although efforts seem to have been stepped up, there is not yet reason for optimism. In fact, COP27 was marked by the failure of government leaders to truly commit financially to meeting climate goals. While the past year has witnessed devastating disasters, a potential economic downturn and energy crisis, the war in Ukraine, geopolitical unrest, and the aftermath of Covid pandemic, this is not enough to justify the lack of commitment, she writes.

While countries have increasingly prioritized the financing of climate action in the last years, talks at recent COP summits seem to indicate that an even greater financial commitment was made to mitigate the effects of climate change. This also seemed to be the case for the recent COP27 summit that took place in Egypt at the end of last year, and which I attended. For example, on November 9 last year, the COP27 presidency explicitly scheduled a Financing Day to emphasize finance as the key to achieving climate policies and increasing climate ambition.[i]

And at the summit, attention was draw to the huge gap between climate adaptation financing and loss and damage commitments, the latter referring to the negative consequences of climate change risks that cannot be or are not mitigated in time.[ii] Thus, at the summit, developing nations banded together to urge wealthy nations to increase their financial commitment to addressing these urgent problems. The somewhat positive news is that parties at the summit in the end agreed to create a specific fund on loss and damage that aims to provide financial assistance to countries most vulnerable to the effects of climate change.

However, even if the issue of loss and damage is now being added to the official agenda and for the first time has explicitly been discussed at a COP meeting,[iii] there is still a long way to go in enacting the commitments. Here are some of the things I have observed while at the COP27 summit showing that at present, it’s still all talk and no trousers when it comes to implementing climate funds:

1. It has not yet been decided exactly “who should pay into the fund, where this money will come from, and which countries will benefit”. [iv] This may raise concerns that negotiations around specific issues related to how the fund will operate are likely to go on for years, with no concrete investments being made. Another central question in the funding of climate action is linked to the allocation of funds: which issues or activities should be allocated funds first, and by whom? Apart from scale-up commitments, national governments should also consider the strategic allocation of funds for climate action. An effective strategy is needed to assess and prioritize different agendas and issues and distribute funds among those countries requiring financial resources.

2. Previous commitments first need to be honoured. It is reasonable to have to somewhat curb our optimism about getting something done when we recall that the financial commitment wealthy countries made in 2009 to mobilize USD 100 billion a year by 2020 for climate adaptation still hasn’t been fully honoured. In fact, COP27 opened with a rallying call for countries who’d previously committed money to pay up.

3. The discussion on climate financing also revolves around how much money we will need to keep global warming within the 1.5°C limit and how countries and people who need the money most can get access to it. On one hand, climate operations seem not to be receiving nearly enough funding. Although at COP27, we witnessed nations constantly announcing new finance plans to close the funding gap, including 10 million euro from the Netherlands for the Africa Adaptation Acceleration Plan upstream financing facility, a USD 150-million package from the US for adaptative measures, 11.6 billion pounds from the UK for international climate finance, and an increase by Germany of its climate contribution to USD 6 billion a year by 2025,[v] to name a few, these are by no means sufficient to keep us on the 1.5°C

4. On the other hand, it appears that access to climate funding remains a problem for those in need all around the world. There are certainly a variety of financial and technical resources floating around in the system given that party representatives from wealthy and developing countries alike have pledged to allocate even more funds. However, how to locate and access funds can be tricky. At the summit, civil society leaders from the developing world pushed for more streamlined access to financial resources. Representatives of NGOs from China, Angola, Bangladesh, and India for example stated at a side event that it is crucial to ensure and provide better access to NGOs and other entities who fully comprehend local needs and priorities and who closely collaborate with the local communities who suffer the most from the climate crisis.

What can we learn from this? Although there is increasing pressure on parties to scale up their ambitions, the execution thereof may actually be the bigger problem, as leaders of developing nations have stated that keeping existing promises is more vital than making more pledges. Despite the fact that the Egyptian presidency defined this meeting as the “Together for Implementation” COP,[vi] there are still more promises than a clear implementation strategy for financing aid initiatives.

To this end, I have made a number of suggestions based on my observations, which are detailed below.

The private sector should be encouraged to invest

First, it has become strikingly clear that public funds from national governments cannot be the sole source of climate financing, first of all because of their hesitance or inability to commit sufficient funds. Here, the private sector can play a significant role. Governments must develop policies to encourage private sector investment in addition to increasing their own investments in various initiatives. One of the most crucial things governments can do according to Mark Carney, UN special envoy for climate change and finance, is to “provide clear signals on where they want to go in key industries” and supplement these with “targeted and effective incentives”.[vii]

Local realities need to be heeded and technical support provided

Second, whether funds for climate action are international, national, regional, or local, it is essential to maintain a flow of information, provide clear application guidelines, and support staff capacity building. However, as the representatives pointed out during the side event, those who engage with local stakeholders targeted by climate action lack clear instructions on how to access these resources, and those negotiating financial packages, are likely to have little understanding of local requirements. It appears that the top politics may already be detached from the bottom-up realities.

The climate crisis should not be used as a geopolitical bargaining chip

Lastly, certain issues such as the level of mitigation efforts and NDCs appear still to be overlooked by the parties. Talks on finance cannot dictate the narrative at the negotiations. Moreover, the disconnected offers and needs may serve as a wake-up call for all parties that the multilateral talks are not and cannot be the sole solution to our climate catastrophe. Parties cannot use the climate crisis as a geopolitical bargaining chip; civil society and business actors may not be best served by sitting at the table and talk or shouting some slogans outside the meeting rooms.

[i] Refer to the COP27 website

[ii] Refer to UN Environment Programme

[iii]  Refer to the UNFCCC website

[iv] Refer to UNEP’s website

[v] Refer to the Global Center on Adaptation

[vi] Refer to the UNFCCC Climate Champions website

[vii] Refer to Mckinsey Insights

[vii] Watch the recording on YouTube

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