Mobilising EU investors to narrow the developing-country climate-finance gap

Summary:

Collectively, the European Union (EU) and its members are the largest providers of public sector funds for climate mitigation and adaptation in developing countries. The European Commission’s sustainable finance strategy, updated in July 2021, set the goal of also scaling up the so-far miniscule private climate finance in low- and middle-income countries. This tied in well with the change of strategy at the European Investment Bank, which in December 2020 re-styled itself as a ‘climate bank’, and whose sizable balance sheet could be deployed outside the EU.

If designed well, a blending of public EU resources with the ample private institutional capital that targets sustainability outcomes could mobilise substantial funds. To identify the right partners, any new EU scheme should be announced ahead of the United Nations COP27 climate summit in November 2022, which will be hosted by Egypt and will focus on developing countries.