By Faridat Salifu
According to a recent report released by the US non-profit, the Climate Policy Initiative, global climate finance flows have surpassed the $1trillion mark.
While this milestone is a cause for celebration, the organization emphasizes that significant increases in investments are still required to curb global warming to 1.5°C.
The report, titled “Global Landscape of Climate Finance 2023,” revealed that average annual flows in 2021 and 2022 reached $1.3 trillion, marking a remarkable double-up from the levels seen in 2019 and 2020.
Notably, 28% of this increase can be attributed to the improved availability of data, the report stated.
Barbara Buchner, the Global Managing Director at the Climate Policy Initiative, highlighted that crossing the $1trillion threshold represents only 1% of global GDP.
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She stressed the urgency for all stakeholders to hasten their investments to significantly reduce future economic and social costs.
Buchner also emphasized the vast opportunities for businesses to pursue low-carbon and climate-resilient pathways.
The report warns of the increasing costs associated with delayed investment in climate change, both in terms of mitigating global temperature rise and dealing with its impacts.
The cumulative costs of climate change under current policy and investment commitments are projected to be ten times higher than the estimated investment required to limit global warming to 1.5°C.
At the press briefing for the report’s release, Baysa Naran, a manager at the Climate Policy Initiative, emphasized the need for immediate investments, citing potential social and economic losses that could be $1,266 trillion lower compared to the business-as-usual scenario.
The report also indicated that more than 90% of global climate finance flows in 2021 and 2022 were directed toward climate change mitigation, marking a significant 60% increase from the previous biennial period.
A substantial portion of these funds were allocated to renewables and low-carbon transport, which are often perceived as less risky investments by stakeholders.
