Multinational development banks should be overhauled so they can play a bigger role in financing critical climate-related projects that might otherwise struggle to secure funds, the official presiding over the COP28 climate talks said.
“We need real reform of international financial institutions and multilateral banks to unleash more concessional dollars, lower risk and attract more private finance for vulnerable communities,” Sultan Al Jaber, who also leads the United Arab Emirates’ state oil company, said.
Access to affordable capital is crucial if the world is to move from setting lofty goals aimed at averting catastrophic global warming to actually “getting it done,” he told an event in Dubai.
Banks and climate officials have stepped up calls in recent months for institutions like the World Bank or the Asian Development Bank, which are partly funded by governments, to be reoriented to focus on climate.
Proponents of the reforms argue that those multilateral development banks could become the foundation of a Marshall Plan for the planet, supporting projects that might otherwise be too risky to attract finance — and accelerating the transition to cleaner energy.
Those reforms will be on the agenda at the spring meetings of the World Bank and International Monetary Fund in April. French President Emmanuel Macron, together with Barbados Prime Minister Mia Mottley, a key advocate of the changes, will also host a summit in Paris in June to focus on the potential role of so-called MDBs.
Larry Fink, BlackRock’s chief executive, has argued they would be most useful in the transition to clean energy if they acted like insurers that help reduce risk for private investors.
Insuring against currency risks in particular would reduce the cost of finance in many countries that struggle to attract capital, HSBC Corp CEO Noel Quinn said on the sidelines of an event in Abu Dhabi in January.
Last year’s United Nations-backed climate summit, hosted by Egypt, clinched a historic agreement for rich countries to compensate poor nations battered by climate change they didn’t cause. That adds to the growing urgency to ensure financial flows are aligned with global climate goals.