Open Letter to the Coalition of Finance Ministers for Climate Action

The climate crisis is an existential crisis for the world. Already, communities globally are buckling under the pressure of climate impacts that affect the lives and livelihoods of the most vulnerable people and ecosystems. What we decide today will shape our future tomorrow. And finance for climate action is one of those decisions that will shape the future.

This is an open letter sent by WWF to the Coalition of Finance Ministers for Climate Action ahead of their next meeting during the World Bank / International Monetary Fund Spring Meetings, taking place from 17-19 April 2024, in Washington DC.

This year provides a great opportunity to restructure the financing of climate action in order to strengthen global resilience, as well as address increasing needs for solutions. Therefore, I’d like to offer my views on key finance issues to be addressed this year: delivering on existing commitments; at least doubling adaptation finance and financing losses and damages; no double counting with resources for biodiversity and, most importantly, the new collective quantitative goal and making finance flows consistent with 1.5 degrees.

Delivering on existing commitments: During the 16th Conference of the Parties of the United Nations Framework Convention on Climate Change, which took place in 2010 in Cancún, developed countries committed to jointly mobilize US$100 billion per year, starting in 2020, to address the needs of developing countries. 

Delivery of this goal is an important step in building trust between parties to the Convention and will be an important stepping stone in reinforcing a global architecture of climate finance. This effort should continue until 2025 and since the goal was not delivered in at least the years 2021 and 2022 – it should also make up for any existing financial gaps.

At least doubling adaptation finance and financing losses and damages: During the 26th Conference of the Parties in 2021 in Glasgow, parties agreed to double finance for adaptation in developing countries – it should be based on 2019 adaptation finance level and be delivered by 2025. For many communities, especially those most vulnerable to climate change, adaptation is the only way to avoid the worst impacts of changing climate and not suffer the worst brunt of possible losses and damages. And avoiding losses and damages is critical to safeguard any development work done in previous years – to avoid any steps back.

While the new goal is discussed, we cannot forget about existing architecture. Last year saw the successful establishment of a new fund dedicated to loss and damage during the 28th Conference of the Parties in Dubai. However, initial replenishment pledges, which amount to less than US$700 million, are underwhelming at best. The possible losses and damages in developing countries alone might reach a level of US$400 billion per year in 2030 if we fail to tackle the required ambitious mitigation action and adaptation measures. To address this, and be an additional measure helping to safeguard any progress made as part of the Sustainable Development Goals, we need robust and ambitious pledges, while not forgetting any adaptation work required – which can lower the final needs.

No double counting with biodiversity resources: The Global Biodiversity Framework includes important financial targets, with key milestones for 2025 and 2030. Any double counting between funding commitments for climate and biodiversity must be avoided, while solutions that benefit nature and climate should be prioritized. Although synergies should be maximized, financial commitments should be met separately under both regimes. 

New Collective Quantified Goal (NCQG): This will be the most significant discussion of this year. The NCQG is a goal that was envisioned in the Paris Agreement, and which should replace the existing US$100 billion per year goal – starting from that floor, and starting from the year 2025.

Involvement of Ministries of Finance, and especially members of the Coalition of Finance Ministers for Climate Action, will be critical in this regard. Your institutions can give a proper mandate to national negotiators and allow for an ambitious outcome, including a sufficient level of finance, especially from public sources.

As the Intergovernmental Panel on Climate Change assessed, there is a need to increase existing climate investments sixfold to allow for a transformation up to the required scale. The new goal should start from a floor of at least US$600 billion per year, taking into account the needs and priorities of the developing countries, and from various new and additional sources. However, the various assessments show the needs of developing countries on the scale of over US$1 trillion per year, and those needs should be taken into account while setting the final amount.

Making finance flows consistent with 1.5 degrees: And last, but definitely not least, the Paris Agreement in its Article 2 paragraph 1c envisioned a goal of making finance flows consistent with a pathway towards low greenhouse gas emissions and climate resilient development.

Achievement of this goal is a global responsibility, but Ministries of Finance can take a lead in this regard. WWF expects you to implement the necessary policy reforms to support the transition towards net-zero, nature positive and resilient economies, and introduce regulatory frameworks that incentivize the financial sector to support and finance this transition. Active engagement in the preparation of new Nationally Determined Contributions (NDCs), and creating a clear financing and disclosure framework to make sure that private finance will support the achievement of NDCs will be essential. We need to make sure that all financial flows, both public and private, are aligned with the goal of limiting the global temperature rise to 1.5℃ above the pre-industrial levels. This goal, while heavily endangered by inadequate action to date, can still be achieved and for that we need urgent work at the WB/IMF meetings, G7 and the G20, in addition to national level work. 

We hope that you will take a proactive and ambitious stance and do your part for the world to meet the challenge of climate change.

Signed,

Manuel Pulgar-Vidal

Global Lead Climate and Energy 

COP20 President

Former Minister of Environment for Peru