A growing movement to finance net zero at COP28

Date:

It’s a pleasure to be here for the launch of the UNEP-convened Net Zero Export Credit Agencies Alliance (NZECA). My thanks to the Glasgow Financial Alliance for Net Zero (GFANZ), co-chaired by Mark Carney, and the Innovation and Knowledge Hub at Oxford University and Future of Climate Cooperation for their support to this alliance.  

Let’s start with a climate health check. Greenhouse gas emissions and the global average temperature are hitting new highs. Extreme weather events are occurring more often, developing faster and becoming more intense. These impacts are battering vulnerable communities. The diagnosis is poor.  

The prognosis is worse, because UNEP’s Emissions Gap Report tells us the world is heading for temperatures of 2.5-2.9°C. So, the world must deliver a just transition to low-carbon, climate-resilient economies. A transition that delivers massive cuts to greenhouse gas emissions in developed nations, low-emissions growth in developing nations, and climate-adapted communities, infrastructure and economies everywhere. 

The financial sector plays a key role in supporting the just transition, which requires a system-wide rechannelling of trillions of dollars each year. This includes closing the adaptation financing gap. UNEP’s 2023 Adaptation Gap found that this gap has grown by at least 50 per cent to US$194-366 billion per year. Climate impacts are here for decades. We need to protect the most vulnerable. 

Initiatives such as the GFANZ and UN-convened alliances, including the Net-Zero Asset Owners Alliance, the Net-Zero Banking Alliance and the Net-Zero Insurance Alliance seek to align private finance with climate goals. NZECA now joins this illustrious line-up of net-zero alliances. 

Friends, 

International trade is key to enable access to climate technologies and innovation. Export Credit Agencies (ECAs) and Export-Import Banks (EXIMs) banks are important in this space, since 80 to 90 per cent of international trade, up to $28 trillion annually, relies on public and private trade and export financing, guarantees and insurance. 

ECAs and EXIMs can create opportunities for net zero and cover risks beyond the appetites of commercial market participants. They can play a unique role in domestic economic transformation, including through fostering just transitions. 

Today, the leading ECAs commit to supporting net-zero economies by 2050 or sooner, setting interim milestones on how to get there along the way, including to ensure transitions that are just and in line with 1.5°C. With the support of the UNEP Finance Initiative and its partners, they will drive ambition on real economy decarbonization. 

Action by the alliance will be based on the principles of inclusiveness and transparency – which are essential to enable clear target setting and progress monitoring. NZECA will provide membership options for ECAs who are immediately ready to commit to net zero by 2050 or sooner. And for those that are still building capacity in this area. The latter group of affiliate members will benefit from interacting with more advanced ECAs, which will help them accelerate their pathway to net zero.  

NZECA can become a truly global alliance, with members from a mix of highly industrialized, emerging and developing economies. This is important because, as I said, emerging and developing economies should meet their legitimate development needs with low-carbon growth. We cannot stop climate change if the big emitters decarbonize, only for other nations to step and take their place. 

Friends, 

Large private financial institutions are powerful economic actors, but they cannot deliver net-zero alone. Bringing in public finance, the missing piece in the net-zero financial landscape, will support real economy transitions. NZECA is setting a clear precedent for others to follow. So, I call on other public finance institutions to follow suit and bring the full might of the global financial system to bear on slowing and adapting to climate change. 

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