Africa-Europe-Asia: catalysing green reform of the international financial system

It’s not about the money for climate finance; it’s about removing inequity in the system

In the wake of last month’s Paris Summit for a New Global Financing Pact, envoys from Africa, Europe and Asia gathered for a policy dinner debate, expressing cautious optimism that momentum was building but warned that the way international financial institutions work remains a major barrier to green investment. High levels of expensive-to-service debt in lower-income countries and unequal access to capital were named as major culprits.

Participants identified positive steps taken in Paris, including moves to pause debt service payments for countries hit by climate crisis shocks, progress on the question of special drawing rights at the International Monetary Fund and a few country-specific agreements, such as a new energy investment package for Senegal. However, they also pointed out that wealthy countries have yet to make good on commitments to provide $100bn a year to vulnerable countries for climate finance.

Structural progress was missing at the summit. “What was not present there was any concrete solutions, especially on finance,” one ambassador summed up. Country participants stressed the need to change structures and voting rights in multilateral development banks deemed to favour the ‘Global North’ over the ‘Global South’. They also named innovative ideas, such as expanding carbon markets across the three regions, and filling the Loss and Damage Fund with an international shipping emissions tax or even an oil pollution fund.

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