At the Paris Climate Finance Summit, world leaders came together to highlight the need to boost crisis financing for poor countries, reform post-war financial systems and free up funds to tackle climate change.
The European Investment Bank (EIB) has committed to intensify its support for the Global South and to join innovative mechanisms to accelerate a just transition in developing countries at the summit.
The Paris Climate Finance Summit was a New Global Financing Pact in Paris, organised by French President Emmanuel Macron. The summit aimed to secure funding for climate action and the green transition, and to ease the post-coronavirus debt burdens of developing nations.
The summit was attended by more than 40 heads of state, including many from Africa, and the chiefs of the World Bank and the International Monetary Fund.
The Paris Climate Finance Summit took on the huge task of addressing the lack of money flowing to poor and vulnerable countries. Prime Minister Abiy Ahmed of Ethiopia said “poverty, debt, inflation triggered due to the Russia-Ukraine conflict, and increasing climate impacts”, at the summit.
During the Summit, U.S. Treasury Secretary Janet Yellen said, “Even with the capital that the World Bank and the MDBs (multinational development banks) have, there is clearly potential to increase financing capacity”.
US Treasury Secretary Janet Yellen assured all at the Summit that evolving the MDBs is not about displacing their institutional core development and poverty work, but about building resilience to shocks.
European Commissioner for International Partnerships Jutta Urpilainen said, “Low- and middle-income countries are particularly hard hit by climate change. We are collectively off track from achieving the Sustainable Development Goals by 2030 and inequalities are on the rise.
PM Ahmed of Ethiopia said more concessional and grant financing is needed, while PM Mottley laid out a call for reduction of debt levels in developing countries — particularly debt cancellations for least developed countries.
Ethiopian PM also emphasised that while private sector money can be unlocked, it cannot replace long-term development money. The latter is needed to help middle-income countries access concessional finance as well.
The summit included a range of deals for individual nations — notably a debt restructure package for Zambia and a $2.7 billion “just energy transition partnership” for Senegal — and proposed changes to the way the World Bank and the IMF operate, which will have global impacts.
The World Bank also said they would start adding clauses to lending terms that allow vulnerable states to suspend debt repayments when natural disaster strikes.
Other nations lamented that industrialised nations had passed the buck in terms of providing more funding to those who are suffering on the front lines of a climate crisis they did little to cause.
Harjeet Singh, head of global political strategy for Climate Action Network International, said “the summit’s outcomes leaned too heavily on raising more money from the private sector and the coffers of multilateral development banks”.
While the summit did not have a breakthrough moment in climate action justice, it certainly did start a conversation around the importance of climate finance for the developing and underdeveloped countries.
“We must forge ahead with a global transition to ensure our economies are future-proof. This means not only reducing greenhouse gas emissions to net zero and adapting our economies to shield them from climate change, but also tackling the root causes of the severe destruction of nature that is threatening the vital resources we rely on for our survival”, said Christine Lagarde, President of the ECB, at the Summit.
All eyes now turn to more traditional events later in the year, including the International Monetary Fund and World Bank annual meetings, a G20 meeting in September and the COP28 climate talks in Dubai.