Private Sector Finance Engagement

Given the scale of the finance and investment industry globally, the quantum of finance that will be needed to address the climate challenge globally, it is unavoidable for the private sector finance to become a major part of the solution in the achievement of objectives of the Convention and goals of the Paris Agreement for all countries and all stakeholders.

Credit: Niklas Jeromin/Pexels

The pivotal role of finance, and particularly private sector finance (holders of vast finance and investment resources), in supporting climate change has formed an ever-greater part of discussions in the intergovernmental process on climate change over the years. Private sector involvement in global initiatives and pledges to mobilize climate finance and engagement in mandated UNFCCC events has increased as have the number of indirect and direct references to private sector finance in decisions. Surprisingly despite this rise in importance, the intergovernmental process (set up to work with governments) has limited ways to interact meaningfully with this important group of stakeholders.

Climate Finance Public-Private Policy Dialogues provide a way for climate finance intergovernmental policymakers to engage constructively with private sector finance and vice versa – the dialogues aim to bridge the gap between policy and private sector finance, enable understanding and build trust in doing what needs to be done together.

It’s an open space for developed and developing countries who depend on climate finance to work together towards harnessing both the domestic and international financial sectors, with the full understanding that any private sector finance effort in this regard will be supplementary to public climate finance.

It is generally accepted that the trillions that will be needed to address climate change globally cannot be stemmed from domestic and international public sources alone, many countries are already seeking ways to tap into private sector finance, their expertise and wider markets. In turn, the financial sectors’ growing interest in climate, sustainable and impact investment remains untapped especially in developing countries including those with developed capital markets.