Climate Finance

Global Investment for a Resilient Low-Carbon Economy

Stabilizing the global climate is one of the most urgent challenges in coming decades. Our warming world affects all people and ecosystems, particularly the poor who already suffer disproportionately from climate-change impacts. Major financial investments – from both public and private sources and guided by smart and equitable policies - are required to transition the world’s economy to a low-carbon path, reduce greenhouse gas concentrations to safe levels, and build the resilience of vulnerable countries to climate change.

WRI is addressing how these massive investments toward a low-carbon and resilient economy – which we refer to as climate finance –can be realized.

In developing countries, climate change investment needs are significant. Direct government funding is scarce. And the billions of dollars committed to be marshaled by industrialized countries remain inadequate to the magnitude of the challenge of stabilizing a steep trajectory of greenhouse gases. Additional financial investment should be accompanied by rules, regulations, fiscal incentives and effective markets at international, national, and sub-national levels to shift current and projected “business-as-usual” investments, and mobilize resources at the scale required.

WRI’s Vision of Success

Public and private actors—development financing institutions, governments, and private sector investors, including financiers and project developers—significantly shift and scale-up their investments in sustainable, low-carbon and climate-resilient development. These investments will create new markets, address long-term opportunities and risks arising from climate change, promote wider socio-economic benefits, and minimize social and environmental harm.

WRI Strategy

WRI focuses on climate finance broadly defined, not just international public climate finance but both public and private flows including domestic (within developing countries) and international (to developing countries) finance that support climate-related goals.

WRI focuses its expertise on the technical and institutional aspects of three major questions:

1. How to SHIFT finance from high carbon to low carbon and climate resilient investments (mainstreaming);
2. How to LEVERAGE private flows using public climate finance (domestic and international) and
3. How to ASSESS the impact or effectiveness of climate finance, whether positive or negative.

WRI is pursuing national, international and private sector strategies.

National Strategy: Strengthen institutions for effective climate finance mobilization, management and monitoring

Related projects: Open Climate Network, Measurement & Performance Tracking in Developing Countries

SHIFT

• Facilitate building national public institutions and capacity to access, manage, program, deploy and monitor climate finance in an effective and transparent manner.

• Empower non-governmental institutions and actors to engage and participate in climate finance processes in order to ensure more effective outcomes.
  Related projects: Open Climate Network, Electricity Governance Iniative, Measurement & Performance Tracking in Developing Countries.

LEVERAGE

• Ensure development financing institutions and finance ministries catalyze a shift in public and private investments toward climate-friendly development through the strategic use of international climate finance.

ASSESS

• Help create efficient and accountable financial systems. WRI aims to help national governments and their domestic stakeholders develop systems through which they can wisely generate, access, disperse, and track finances for adaptation.
  Related work: Vulnerability & Adaptation

• Maximize the impact and effectiveness of climate finance by aligning national mechanisms for receiving, allocating and disbursing international climate finance with the country’s planning, budgeting, programming and monitoring procedures and systems.
  Related project: Open Climate Network
  Related publication: Summary of Developed Country ‘Fast-Start’ Climate Finance Pledges

International Strategy: Build a robust, effective and equitable climate finance architecture

SHIFT

• Promote more effective and legitimate governance of international climate finance by bringing to bear developing country expertise and experience to inform discussions on governance and operation of international climate finance.
  Related project: International Financial Flows & the Environment (IFFE).
  Related blog posts: the Green Climate Fund.

• Ensure mainstreaming climate change in international development finance by encouraging public international financial institutions to adopt and implement ambitious, internationally recognized standards. Such a significant investment shift will support low‐carbon and climate‐resilient development, while ensuring high environmental and social standards.
  Related project: International Financial Flows & the Environment (IFFE)
  Related publications:

ASSESS

• Create an enabling environment for investment by ensuring that international climate finance includes long-term support for conducive policy environments and addresses non-financial barriers to investment. WRI has developed a framework to guide governments and their international partners in selecting pre-investment activities to support and inform the providers of public international climate finance.

Private Sector Strategy: Leverage private sector flows from public climate finance

Related project: Climate Finance & the Private Sector

SHIFT

• Provide robust research and analysis to determine what tools and approaches are the most effective at leveraging private climate investment, including detailed mapping of financing instruments used by public and private institutions to finance climate-relevant projects.
  Related publications:
• Moving the Fulcrum: A Primer on Public Climate Financing Instruments Used to Leverage Private Capital
• Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment: Focus on Multilateral Agencies

LEVERAGE

• Help leaders in the public sector seize the opportunity to leverage private investment in a low-carbon future. The public sector can expand its role in effectively unlocking private investment by reducing risk, directing investment and maximizing public and private benefit through the appropriate mix of policies and finance.
  Related resources:
• Moving the Fulcrum: A Primer on Public Climate Financing Instruments Used to Leverage Private Capital
• Climate Finance and the Private Sector brochure

ASSESS

• Mobilize WRI’s strong external ties with private sector financial institutions to bring a private sector perspective to climate finance, and help translate the complex languages of private sector investors and public sector policy makers.