Although climate finance is a key enabler to enhance and accelerate ambitious climate action in developing countries, it has not reached the needed scale. The intergovernmental process (UNFCCC) must urgently scale up mobilization efforts and set a robust finance architecture. Doing so is essential to effectively implement the Paris Agreement and achieve its long-term goals, including the collective endeavor of making finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development.

The Finance Center seeks to strengthen key policies and governance elements in a small set of strategically-important institutions in order to promote financing for sustainable activities and discourage financing for unsustainable ones. We rely on our deep knowledge of these institutions, the UNFCCC finance negotiations and of the climate finance architecture; on our convening power; and on our in-house sectoral expertise to produce timely research products that inform key decisions.

While our efforts apply to a broad range of financial institutions, our focus is primarily on:

UNFCCC Finance Negotiations

The UNFCCC plays a pivotal role in setting rules and norms for global climate action, including on finance. One of the overall goals of the Paris Agreement, which was created under the UNFCCC, is to align all financial flows towards low-emission and climate-resilient development.

The Finance Center, in partnership with WRI’s Climate Program, conducts research and engages UNFCCC negotiators to:

  • Improve reporting of climate finance provided and received.
  • Track progress towards climate finance goals, including mobilizing $100 billion by 2020, and achieving a balance in public funding for adaptation and mitigation.
  • Ensure that climate funds are receiving adequate guidance to improve their coordination and effectiveness.
  • Assess progress in aligning all finance flows with the goals of the Paris Agreement.

Policies, practices and governance of specialized climate funds, especially the GCF

Specialized climate funds provide vital public resources, usually on concessional terms, for climate change adaptation and mitigation. The resources in these funds are limited, so it is essential that they be directed toward activities with the greatest potential impact. The Finance Center works to help ensure that climate funds are designed to effectively distribute their financial resources. While our work encompasses many of the climate funds, such as the Adaptation Fund (AF) and the Least Developed Countries Fund (LDCF), we focus much of our attention on the Green Climate Fund (GCF). 

As the largest dedicated climate fund, the GCF plays a particularly important role in the climate finance architecture. The Finance Center works to ensure that the GCF channels funding effectively and efficiently to countries in need. This includes work on:

  • The GCF’s overall governance structure.
  • The GCF’s approach to supporting climate change resilience and adaptation.
  • The GCF’s systems for accrediting and channeling funding through entities from developing countries.

Photo Credit: UNclimatechange/Flickr.