Turning ambitious and workable plans for NDC implementation into measurable climate action requires the mobilisation of reliable financial resources. The second day of the Global NDC Conference therefore focused on the role of finance as a crucial enabler for NDC implementation in the pursuit of global climate goals.
The conference day started with an emphasis on the positive economic impact of well-designed climate policies. Jo Tyndall, the Director of the Environment Directorate at the OECD, presented the brand new joint UNDP-OECD report “Investing in climate for growth and development: The case for enhanced NDCs”.
As a main message, the report underlines that climate ambition can strengthen economic development, while results depend on NDCs that are implementable and investable. It points out that is vital to enhance political ownership across governments, optimise public finance, redirect private finance and strengthen international support. NDCs need to be aligned with national as well as local development priorities and affected stakeholder need to be put at the centre of NDC processes to secure a just transition. Additionally, the report provides strong evidence on the fact that investment in clean energy and energy efficiency can increase productivity and innovation and enhanced NDCs have the power to increase global GDP, while avoiding climate damages and related economic losses.
With that in mind, the opening plenary panel discussed key questions of how more investments for NDC implementation can be secured and funding gaps between private and public sectors can be bridged, while ensuring efficiency and efficacy of spending.
Pablo Vieira, Global Director of the NDC Partnership Support Unit, underlined the need for capacity building to enable strategic use of public funding for private sector mobilization, especially in developing countries. He stressed that making NDCs investable means aligning them with national development goals. “Climate finance should be integrated into development plans and national budgets. There is a huge opportunity here,” he said.
The panelists called for governments to create enabling environments, for instance through conducive policy, regulations and institutional set-ups, and use public finance strategically to de-risk and attract private capital – for example through blended finance mechanisms. The panel also recognised a disconnection between government and private sector, which is often due to gaps in language and common understanding, dissimilar expectations and risk-return mismatches. Thus, capacity building is needed for governments, especially Ministries of Environment and Ministries of Finance, to enter a fruitful conversation with investors and co-create convincing business cases. Finally, panelists pointed out the need to root climate finance in trust and local ownership, bringing youth and small and medium-scale entrepreneurs at the table as co-creators.
A focus on de-risking for attracting private investments and innovative financial instruments
The afternoon was marked by two rounds of interactive sessions on relevant finance topics. International finance experts from public and private institutions, NDC implementation experts, and scientific advisors gave valuable insights and sparked collective discussions and extensive knowledge exchange among the participants.
One of the sessions focussed on investable NDCs and de-risking approaches to attract private investment. Countries are in a better position to attract the private capital needed for meeting their ambitious climate targets if they invest into understanding private sector needs and develop de-risking mechanisms as well as actionable roadmaps for mobilizing capital.
Innovative financial instruments strongly support the implementation of NDCs, another session showcased. The experts explored how innovative instruments can catalyze private investment for climate action. The International Institute for Sustainable Development (IISD) presented the participants with new research on the relevance of specific financial instruments in different country contexts, especially for least developed countries (LDCs), enabling conditions, and donor support.
Maribel Hernández, senior policy advisor at IISD, highlighted five central instruments for the mobilization of private sector investment: guarantees, pooled investment funds, green and sustainability-linked bonds, debt-for-nature and debt-for-climate swaps, as well as adaptation benefits mechanisms.
Designing ready-to-finance projects for mitigation and adaptation
Limited funding for early stages of project preparation is one major challenge to swiftly implement NDCs and build bankable NDC pipelines in emerging markets and developing economies (EMDEs). For now, most of the Project Preparation Facilities (PPFs) provide mainly late-stage implementation. Often, Multilateral Development Banks (MDBs), Development Finance Institutions (DFIs) and institutional investors are lacking ready-to-finance projects.
During an interactive table discussion, the Pipeline-to-portfolio Café, participants were asked to co-design country-driven models that deliver bankable projects and thus turn pipeline projects into investment portfolios. Participants agreed that the language used should be understandable for all parties involved. Additionally, trust in organisations that are designing the projects and alignment between sectors are key to secure finance.
A fourth session of the afternoon looked at how countries can translate adaptation priorities of updated NDCs into investable plans through public–private collaboration. Participants jointly explored practical strategies to accelerate adaptation finance and foster exchange between countries and institutions, with a special focus on the role of Ministries of Finance and the private sector. They shared real-world experiences in investment planning, on country platforms, and blended finance. It was highlighted that $1 invested in adaptation yields more than $10 in economic, social and environmental returns over a 10-year period but still adaptation finance remains the hardest to mobilise.
Ensuring people-centered NDC implementation: mobilising context-specific private and public investments
Before the members of the plenary panel shared their insights and reflections of the day, all participants joined an interactive plenary session on advancing finance for NDC implementation. They discussed unresolved questions as well as good practices that already work in climate finance – tapping into crowd experience and creativity.
It was stressed that NDCs cannot be implemented without financing, hence mobilising private and public investment using a context-specific mix of instruments is key for successful implementation. Moreover, NDCs need to be people-centered – private investments are driven by profit and are welcome to close the finance gap, but this may not happen at the expense of indigenous people.
A cheerful way to end the day: dinner cruise along the Spree river
The second conference day ended in a relaxed and cheerful way. During a dinner cruise the circle of conference participants had the opportunity to network and converse about NDC implementation, while the buildings of political Berlin passed by on the banks of the river Spree.
