An agreement has been signed. Climate change is happening. Now how are we going to pay for all the exciting mitigation and adaptation efforts? Here is a summary of some of the latest financial commitments made during the conference, according to UK international development think tank, The Overseas Development Institute (ODI).
The chart above shows a breakdown of the source of new commitments into three categories: private sector (banks and other corporations), energy innovation partnerships, and climate funds created by the United Nations Framework Convention on Climate Change (UNFCCC). Commitments by French banks to invest in green energy, green bonds, and low emission technology dwarf the other sources, reflecting the conclusion that the private sector will pick up a large portion of the climate finance tab. These efforts, which add up substantially over $100 billion before 2020 don’t include $140 billion worth of pledges from US companies such as Apple, Goldman Sachs, and Berkshire Hathaway, according to Bloomberg. While, less substantial the emergence of energy innovation partnerships, where countries like the US and Saudi Arabia join forces along with prominent philanthropists like Mark Zuckerberg, Bill Gates, and Richard Branson to support the development of clean energy technologies have gained momentum. Climate funds that enable developed countries to invest in green projects in less developed nations raised an additional $1.5 billion, according to ODI. These public commitments only reflect a small part of pledged support from developed governments. ODI estimates public finance from the developed world will contribute slightly under $20 billion per year by 2020.
The most impressive progress in terms of climate finance has been from major investment funds and asset managers. The Portfolio Decarbonisation Coalition and the Fossil Fuel Divestment Campaign, which together represent $4 trillion in assets, has committed to divest from carbon intensive investments, according to ODI. Additionally, 26 public and private finance institutions across the globe with $11 trillion in assets agreed to consider the impact of their investments on the climate through creating climate strategies, considering climate risk, and emissions, according to ODI.
At the singing of the Paris agreement at least $100 billion per year in climate finance has been secured from a variety of sources by 2020, with increasingly ambitious goals set for 2025. These pledges for climate investment are supported impressively by the commitment of trillions in institutional assets that will now consider the environmental impact of their investments.