One of the Action Themes at the Climate Adaptation Summit (CAS) 2021 is Finance & Investment.
Why is Finance & Investment an Action Theme at CAS 2021?
Finance is critical to accelerating climate adaptation efforts and to building global resilience to worsening climate impacts. Even though the imperative for action is clear, money is not flowing at the pace or scale needed.
Other Summit Action Themes show great demand for increased finance to strengthen the resilience of our economies and societies. While there are clear economic benefits to investing in adaptation, there is much work to do to overcome several challenges, including the need for coordination, large upfront payments, and insufficient incentives for private sector investments in adaptation.
How is CAS 2021 going to make a difference for financing climate adaptation?
At the CAS 2021 Anchoring Event on Finance & Investment, partners and stakeholders will launch approaches and share experiences on the following topics to accelerate the systematic shift of finance and investment as drivers of climate adaptation and resilience.
Address the urgent need to promote understanding and uptake of climate risks considerations amongst countries’ finance and planning ministries, so that key decisions are aligned with a more resilient future.
Public finance for adaptation, including domestic and international flows, currently amounts to roughly USD 30 billion per year, far short of the estimated need for USD 140-300 billion per year for developing countries by 2030.
The COVID-19 crisis presents both challenges and opportunities for this financing shortfall, largely hinging on how countries factor resilience into their fiscal stimulus and economic recovery plans.
Scaling up private investments in adaptation and resilience has proven difficult to date, partially due to unclear analytics, metrics, and incentives. Strides are being taken to address these challenges, including:
the Coalition for Climate Resilient Investment (CCRI), a first-of-its-kind, private sector-led group that seeks to transform how investment decisions are made, starting with infrastructure;
the Physical Risk & Resilience Commitment (PRRC), co-led by UNEP-FI and the Global Center on Adaptation, which seeks to enhance disclosure of physical climate risks among financial institutions by sharing experiences and best practices, advancing the knowledge and evidence base in the public sphere, and building support for public policies; and
exploration of new and innovative financial mechanisms, like resilience bonds.
While there is a growing body of economic research on adaptation, this topic requires further elaboration nor has it generally been translated into practical tools to inform decision makers.
To support the advancement of the economic case for investing in resilience, we will continue building the evidence through case studies, and translate these findings into decision maker-friendly tools and methods.
