Climate Finance Institutional Update: Green Bond Issuance Reaches US$96 Billion

1 October 2017: September was marked by a flurry of meetings, announcements and reports by multilateral development banks (MDBs), climate funds and other actors working on international climate finance. Increases were reported both in MDB financing in 2016 and in green bond issuances during 2017. The UNFCCC Secretariat made available climate finance-related documents ahead of the UNFCCC Climate Change Conference in Bonn, and studies were released on a number of innovative financing mechanisms and tools.

Standing Committee on Finance Forum Calls for Climate-resilient Infrastructure Funding

Alongside the opening of the 72nd session of the UN General Assembly (UNGA 72) and Climate Week NYC 2017, both held in New York, which featured a number of climate finance-related events and discussions, the month of September saw two key multilateral climate finance-related events: the UNFCCC Standing Committee on Finance (SCF) Forum and the Green Climate Fund (GCF) Board meeting. Convening in Rabat, Morocco, the 2017 SCF Forum focused on ways to increase funding to climate-resilient infrastructure in developing countries. The 18th GCF Board meeting kicked off in Cairo, Egypt, on the final day of September, and has on its agenda a number of funding proposals, as well as discussions on strengthening the Fund’s operations. [UNFCCC Press Release on SCF Forum Outcomes] [18th GCF Board Meeting Documents] [GCF Press Release]

Financing the ‘Climate-Agriculture Nexus’ Draws Attention

In other September news, two forums focused on the nexus between climate and agricultural financing: the African Development Bank’s (AfDB’s) African Green Revolution Forum, taking place in Abidjan, Côte d’Ivoire, stressed the need to “cushion small-scale African farmers from the adverse effects of climate change,” and discussed measures to protect farmers from crop losses. The World Bank-convened AgriFin 2017 Forum, in London, UK, provided a networking place for climate finance investors and developing country financiers working with agricultural clients. [AfDB Press Release] [World Bank Press Release]

The Climate Investment Funds’ (CIF’s) Forest Investment Program (FIP) Pilot Countries Meeting was held in Luang Prabang, Lao People’s Democratic Republic, with the aim of enabling the sharing of lessons among FIP pilot countries relating to the design and implementation of FIP investment plans and other forestry activities. [CIF Press Release]

A workshop of the Climate Action Peer Exchange for Finance Ministries (CAPE) forum, held in Bogotá, Colombia, explored how finance ministries in Latin America could better use and design fiscal instruments for mitigating the impacts of climate change. CAPE, funded by the NDC Partnership Support Facility, the South-South Facility and the World Bank, is a peer learning network for discussions among ministers and senior technical experts from finance ministries around the world on the fiscal challenges related to implementing nationally determined contributions (NDCs). [World Bank Press Release] [World Bank Brief]

New Push for Transformational Investments, Risk Insurance

In major multilateral financing news, the UN and the World Bank announced the establishment of ‘Invest4Climate,’ a multi-stakeholder platform for transformational climate action investments, which will be further developed at the World Bank/IMF Annual Meetings in October 2017 and at the UN Climate Change Conference in Bonn in November 2017.

The World Bank announced it had received €10 million from the German Government for use towards the knowledge and technical assistance activities of its Global Index Insurance Facility.

The World Bank also announced it had received €10 million from the German Government for use towards the knowledge and technical assistance activities of its Global Index Insurance Facility (GIIF). The funding will target the scaling up of the use of extreme weather insurance instruments among poor and vulnerable smallholder farmers. [World Bank Press Release]

The UN Development Programme (UNDP) announced that the Russia-UNDP Trust Fund had approved seven projects, with a total value of US$6.7 million, which will support climate change mitigation and resilience actions, and enhance access to climate finance in 12 countries in Europe, the Commonwealth of Independent States (CIS), Africa and the Caribbean. [UNDP Press Release]

Green Bonds Shoot to Record Highs, Climate Finance Meets Blockchain

Bloomberg New Energy Finance (BNEF) reported that, as of September 2017, green bond issuance had reached US$96 billion since the beginning of the year. The company expects total issuances for 2017 to rise to US$135 billion, representing a 36% increase from 2016. [BNEF Article]

Also in September, decentralized autonomous organization ‘The Integrated Program for Climate Initiatives’ (DAO IPCI), touted by its developers as a “blockchain technology for carbon markets, environmental assets and liabilities,” which enables, among other things, peer-to-peer investments in third-party verified green projects, announced a presale of Mitigation Tokens (MITOs), described as “a digital CO2 cost equivalent.” An Initial Crowd Offering (ICO) is planned to be announced during the UN Climate Change Conference in November 2017. [CPLC Story] [DAO IPCI Website]

UNFCCC Secretariat Releases Finance-related Documents Ahead of COP 23

The UNFCCC Secretariat made available a number of finance-related documents ahead of the UN Climate Change Conference in Bonn in November, including: report of the GCF (FCCC/CP/2017/5); report of the Adaptation Fund Board (FCCC/KP/CMP/2017/6); a summary of the 2017 in-session workshop on long-term climate finance (FCCC/CP/2017/4); and a note on the second biennial high-level ministerial dialogue on climate finance (FCCC/CP/2017/8), held during the UN Marrakech Climate Change Conference in 2016. [Report of the GCF] [Report of the AFB] [Report on the 2017 LTF Workshop] [Note on High-level Climate Finance Dialogue]

MDBs Report Rise in Financing in 2016; GCF Readiness Disbursements Reach US$10 Million

The six major MDBs released their joint annual report for 2016. According to the report, the MDBs’ climate financing in developing countries and emerging economies grew from US$25 billion in 2015 to US$27.4 billion in 2016, of which 77% went to mitigation and 23% to adaptation. [AfDB Press Release]

A more balanced distribution between mitigation and adaptation financing has been achieved in climate finance flows to Caribbean small island developing States (SIDS). A Stockholm Environment Institute (SEI) study found that, in 2010-2015, a total of US$1.48 billion were committed, of which 48% went for mitigation activities, 32% for adaptation and 20% for both. [SEI Study]

In GCF institutional news, the Fund signed an accreditation master agreement (AMA) with the Inter-American Development Bank (IDB) and launched a guide titled ‘Mainstreaming Gender in Green Climate Fund Projects.’ The GCF also signed a US$300,000 readiness grant agreement with Viet Nam and announced that, by the end of August 2017, a total of US$10 million had been disbursed to 59 developing countries through the Fund’s readiness programme. [GCF Press Release on IDB] [GCF Press Release on Gender Guide] [GCF Press Release on Viet Nam] [GCF Press Release on Readiness Fund]

September 2017 Resources

Must-reads for the month of September include studies on green financing in Asia and the Pacific and outcome-based funding to support green enterprises in South Africa, a report highlighting the economic impacts of weather shocks, and information resources on green sukuks and support for NDC implementation, among others. Some of the highlights include:

  • A study by the Asian Development Bank (ADB) proposes national green financing vehicles for sustainable infrastructure investments in Asia and the Pacific [ADB Study];
  • A study by the World Bank draws lessons from an outcome-based funding mechanism piloted in South Africa for “de-risking” investments in promising green small and growing businesses [World Bank Study];
  • A report by the French Institute for Climate Economics examines opportunities and challenges relating to the deployment of “green credit lines” [I4CE Study];
  • A chapter of the International Monetary Fund’s (IMF’s) World Economic Outlook (WEO) 2017 considers the effects of weather shocks on economic activity, and a related blog post calls for the international community to “play a key role in supporting low-income countries’ efforts to cope with climate change,” noting this is “both a moral duty and sound global economic policy that helps offset countries’ failures to fully internalize the costs of greenhouse gas emissions” [IMF WEO 2017] [IMF Blog Post];
  • Marking the launch of Malaysia’s first green Islamic bond, a World Bank infographic explains what a green sukuk is [World Bank Infographic]; and
  • An episode in the UNFCCC’s ‘NDC Spotlight’ webinar series focuses on the IDB’s NDC Invest initiative, aimed at facilitating the transformation of NDCs into investment plans [UNFCCC Press Release].

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The SDG Knowledge Hub publishes monthly climate finance updates, which largely focus on multilateral financing and cover, inter alia, mitigation and adaptation project financing news and lessons, institutional events and news, and latest developments in carbon markets and pricing. Past IISD climate finance updates can be found under the tags: Finance Update: Climate Change; and Finance Update: Sustainable Energy.