MICROFINANCE PAPER WRAP-UP: “Rethinking Climate Finance,” published by BlueOrchard

Rethinking Climate Finance; by Maria Teresa Zappia, Veronika Giusti Keller and Stefano Battiston; published by BlueOrchard; 34 pages; available at http://www.blueorchard.com/wp-content/uploads/BlueOrchard-Academy-study_Rethinking-Climate-Finance-1.pdf

In this report, the authors argue for the increased use of “climate finance” to address climate-change risks. Climate finance refers to “financial investments directed toward mitigating climate-change effects and adapting to negative consequences.”

The report asserts that through 2030, based on current investment trends, there exists an annual shortfall of USD 400 billion in climate-finance investment relative to what is needed to meet the Paris Agreement goal of keeping the global temperature within 1.5 degrees Celsius of pre-industrial levels. To bridge this gap, the report suggests the use of blended-finance products – which combine public and private funds – to encourage private sector investment. Entities including Germany’s KfW Development Bank have introduced structured investment funds that have resulted in climate finance investments in the Global Climate Partnership Fund (GCPF) and the InsuResilience Investment Fund (IIF).

The report also emphasises the incentives that exist for the private sector to actively participate in climate finance. Specifically, the need for investment to address climate-related finance risks. However, based on surveys with key stakeholders, the authors identify that more needs to be done to recognise climate-related finance risks and; therefore, respond to them through climate finance.

By Jolene Khor, Research Associate

Sources and Additional Resources

BlueOrchard publication: “Rethinking Climate Change”
http://www.blueorchard.com/wp-content/uploads/BlueOrchard-Academy-study_Rethinking-Climate-Finance-1.pdf

BlueOrchard homepage
https://www.blueorchard.com/

KfW Development Bank homepage
https://www.kfw-entwicklungsbank.de/

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