Dr. Arvind Kumar*
In 2023 most of the planet including the oceans experienced above-average or record-breaking heat, with more intense rainfall and catastrophic flooding and damage. Changing rainfall patterns led to massive forest fires scorching millions of hectares. A quarter of the world’s population – 1.8 billion people – is directly exposed to substantial flood risk: 90% live in low- and middle-income countries and 40% are poor or extremely poor. Yet, one-fifth of the world’s population is not covered by an early warning system, even though these systems save lives and greatly reduce climate-related disaster losses in developing countries. Greenhouse gas emissions must be cut to avoid the worst impacts of climate change. Countries also need to act to help people prepare and protect them from disasters. Managing risk and building climate proof infrastructure can be game changers. It won’t be inaccurate if at every international platform the urgency and severity of the global climate crisis, along with the emphasis on its interconnectedness with environmental and social challenges is highlighted. Recognizing the interlinkages between the triple planetary crises of climate, nature, and pollution, achieving the Sustainable Development Goals, the goals of the Paris Agreement and the Kunming–Montreal Global Biodiversity Framework (GBF) requires all of us to step up our efforts with urgency and scale. This call is crucial, as time is running out to mitigate the most severe consequences of climate change and other environmental crises.
Acknowledging the calls from COP27 for increasing climate ambition, multilateral Banks like World Bank came to COP28 ready to build on the major progress and outcomes delivered during this past year. At COP 28 they came with a commitment to socially inclusive, gender-responsive, and nature-positive climate and development action. This aligns with the broader global efforts to address climate change and sustainable development with a focus on inclusivity and environmental stewardship. The acknowledgment of different mandates, operating models, geographies, and expertise reflects an understanding that climate action must be tailored to the specific contexts and challenges faced by different countries and organizations. It highlights the importance of flexibility and collaboration in addressing the diverse impacts of climate change. Reaffirming commitments at events like the COP is essential for maintaining momentum and accountability in global efforts to combat climate change. It signals a collective dedication to addressing the complex and urgent challenges posed by climate change, ensuring that actions are not only effective but also socially inclusive and environmentally responsible.
Hub of Loss and Damage fund
The significant gap between the financial commitments made by donor countries for the climate transition and the actual funds needed to address climate challenges. The annual commitment of $100 billion by donor countries falls far short of the estimated $2.4 trillion required annually by 2030. COP28 President Dr. Sultan Al Jaber emphasized the need for a collaborative effort involving governments, international financial institutions, and the private sector to reform the current financial architecture and align global and domestic financial flows with climate goals. There is focus on assisting countries in translating climate action objectives into tangible investment plans and bankable projects. The utilization of the World Bank Group’s financing instruments and capacities, including those of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), to attract larger volumes of private finance for sustainable and climate-smart infrastructure. In fiscal year 2023, the World Bank Group achieved a record delivery of $38.6 billion in climate finance, representing a 22% increase from the previous year. This amount constituted 41% of the total World Bank Group financing, demonstrating a commitment to prioritizing climate-related initiatives.
Developing countries conceded to let the World Bank host the new Loss and Damage fund on a temporary basis, with a view to making it independent later. 2023 has been a year of recovery for South Asia. The region has been hit hard by a series of extreme shocks in recent times: the pandemic, multiple economic crises, ongoing political turmoil and devastating natural disasters. And countries have a long way to go to attain their development goals. But these crises have also shown the resilience and innovation of the people in the region, COP28 must deliver on this promise to make clean technologies cheaper and more accessible everywhere, reduce emissions, cut energy costs, and enhance food security. South Asia taps just a fraction of its vast renewable energy potential. India aims for 50% clean power by 2030. Pakistan wants 60% by 2030. Such ambitions are laudable but require international financing and cooperation on technology transfer. COP28 was the venue to secure these resources and was done in form of this fund. Although NGOs had reservations about high costs and the US’ ideological influence on the World Bank but that is something which has to be taken with a pinch of salt. As Mr. Banga President World Bank mentions, “The fact that 420 million have already shown up, and more will come, is a good sign.” The reality is the Bank is currently not planning to play the role of allocating the money. That will be done by a governing board that needs to be created that should have representation from the donor countries as well as the recipient countries. Their job is like a trustee. They run it, operate it and help to make sure the money goes to the right places.
Way Ahead
Over the coming years, the World Bank has refined its approach to climate risk, which includes developing a methodology for scenario analysis and climate-risk stress testing and its application in states. Although they continue to develop appropriate climate-risk metrics that allow them to measure, monitor, and manage climate risks, they have to recognize that their key shareholders, investors, and stakeholders are keen to understand emissions and other climate-related implications of corporate and development activities. What is needed is to ensure a robust methodology, indicators, and transparent underlying data to track climate mitigation and adaptation outcomes. As climate reporting is rapidly evolving, they will have to continue to assess the impact of climate-related factors on their strategy and risk management, and will enhance disclosures in line with evolving global standards. As countries get richer, they can also build better, less vulnerable infrastructure, and their risk of climate impacts goes down. However, it will require concerted action from all stakeholders, including government, industry, civil society, and consumers. Climate change adaptation can promote development and vice versa. Anyway climate finance has been a key sticking point, with wealthy nations most responsible for emissions not delivering on promises to support the vulnerable states who are worst affected but least responsible for global warming.
*Editor, Focus Global Reporter
