Headline: G20 Backs Plan to Boost Climate Fund Efficiency
The G20, representing the world's largest economies, has approved a series of recommendations aimed at enhancing the effectiveness of climate financing, particularly in developing and low-income countries. The G20’s sustainable finance working group emphasized the need for climate transition project funds to be more targeted and operate more efficiently to accelerate the slow pace of fund disbursements.
According to the report, collectively, the Green Climate Fund, Climate Investment Funds, Adaptation Fund, and Global Environment Facility have the capacity to commit between $4 billion and $5 billion annually. However, the actual amount disbursed in 2022 was $1.4 billion. The disbursement-to-approval rates of these funds vary, with the Global Environment Facility at 76% and the Green Climate Fund at 31%.
The G20 acknowledged that due to differing accreditation and programming requirements among various climate and environmental funds, existing processes are fragmented and time-consuming. Though the volume of funds is small compared to other public and private sources, the G20 recognizes the importance of these funds in providing concessional resources that support an effective climate transition.
An independent review commissioned by the G20 suggests that climate funds should implement targeted measures to enhance efficiency. These measures include simplifying accreditation processes, reducing project approval times, and speeding up disbursements. It also calls for collaboration to harmonize procedures among funds, integrate operations, and lower transaction costs. Additionally, the review recommends that funds proactively support investment platforms established by countries, shifting from individual project support to strategies directed by the countries themselves.
The G20 report commits to monitoring the effective implementation of these recommendations during upcoming G20 presidencies. Monitoring will be conducted in cooperation with climate and environmental funds, noting the voluntary nature of these improvements.
Brazil, holding the G20 presidency, is actively advocating for increased financing for developing countries. Brazilian leadership underscores the urgency of the issue, highlighting that these countries are increasingly impacted by climate change while struggling to transition to low-carbon economies.