Climate investments critical for post-COVID recovery: GCF conference highlights mobilisation of private capital to green developing economies

Investors at the GCF Private Investment for Climate Conference have flagged the pandemic as a wake-up call for efforts to shift portfolios towards climate-friendly investments.

The three-day virtual event, which concluded today, stressed the private sector’s critical role in resourcing developing countries to implement green economic stimulus measures in response to the challenges of COVID-19 and climate change.

• Christian Deseglise, HSBC’s Head of Sustainable Finance and Investments, Global Banking and Markets, said: “The pandemic has been a wake up call for all these efforts. It has focused our attention, the attention of our clients, on the actions that need to be taken in order to build a more resilient, safer and more sustainable economy.”
• Faheen Allibhoy, Managing director of JP Morgan’s Development Finance Institution, said much of the momentum towards climate impact-based financial decisions is coming from investors.  “They would like to articulate the impact of what they're doing, both on the green side as well as on social governance and societal impact,” she said.
• Tony Clamp, Director a.i. of the GCF Private Sector Facility, noted “the conference has shown private sector’s commitment to be at the forefront of driving the change that we urgently need to deliver private sector engagement and financing across the globe to secure our joint climate future”.

Many investors highlighted the role of public-private partnerships to unlock climate investment in developing countries.

Gavin Templeton, Head of Sustainable Finance, Green Investment Group (part of the Macquarie Group) said “we are trying to add value by thinking about what it would take to introduce private capital into infrastructure whose sole purpose is to adapt to climate change.”  “But this is only going to be possible through partnerships with the public sector and the private sector,” he added. “That is going to be key to mobilising private institutional investors into emerging markets.”  Templeton singled out GCF as a key partner in strengthening the synergies of public-private partnerships that empower developing countries to take increasingly ambitious climate action.

Amongst the themes discussed during the event were the role of institutional investors and banks in aligning their portfolios with 1.5C, Navigating the Energy Transition, putting nature on the private investment agenda and catalysing market mechanisms.

Many of the private sector representatives at the conference highlighted the need to take climate, and more recently COVID-19, effects into account when considering how the financial sector is being increasingly shaped by regulatory changes, disclosure requirements and stress testing by central banks and financial regulators.

Opening the conference earlier in the week, Yannick Glemarec, GCF Executive Director, launched a new working paper “Tipping or turning point: scaling up climate finance in the era of COVID-19”. He set out six priority actions to scale up climate finance in the era of COVID-19 including leveraging NDC enhancement efforts to foster policy integration, developing new valuation mechanisms for asset repricing, making blended finance work for nascent markets, and exploring new financial instruments.

According to Glemarec, “Climate change will rewrite business rules, either because we would have succeeded in transitioning to low carbon climate resilient development pathways dominated by new technology systems and economic opportunities,” he said. “Or because we would have failed and will be firefighting unprecedented threats to human security.”

The 3rd annual GCF Private Investment for Climate Conference (GPIC), which was held virtually this year, gathered more than 2200 participants from over 130 countries to discuss priorities, share experiences and forge new partnerships to unlock investments for a green and resilient recovery.

In only three years, GPIC has grown into a global marketplace, bringing together leading project developers, financial institutions, governments, climate leaders and development banks to collaborate in the shared imperative of combatting climate change.