Goal 13: Climate Action
Climate action means stepped-up efforts to reduce greenhouse gas emissions and strengthen resilience and adaptive capacity to climate-induced impacts, including climate-related hazards in all countries; integrating climate change measures into national policies, strategies and planning; and improving education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning. It requires mobilising $100 billion annually by 2020 to address the needs of developing countries in moving towards a low-carbon economy.
Every country in the world is already experiencing first-hand the devastating effects of climate change. The latest analysis by the UN High Commissioner for Refugees (UNHCR) estimates that, on average, 21.5 million people have been displaced by climate or weather-related events each year since 2008. Climate change is directly impacts agricultural yields, as harvests of maize, wheat and other major staple crops fell by 40 mega tonnes per year between 1981 and 2002 due to the warmer climate. According to the UN Environment’s Adaptation Finance Gap Report (2016), by 2030 it is estimated that adaptation costs will range between US$140-300 billion per year.If left unchecked, climate change will undo a lot of the progress made over the past years in development, and undermine efforts to achieve the SDGs.
Financing climate action
Limiting climate change requires a major shift in investment patterns towards low-carbon, climate resilient development, including infrastructure estimated to cost US$4 trillion a year until 2030. Much of this burden initially rests on developed countries, who have the resources to address mitigation and adaptation priorities, and have also committed to support those countries who do not have the resources or capacity to make the shift. A number of catalytic Environment Trust Funds have been established to mobilise the required investments through private and public sources, including the Global Environment Facility. The Green Climate Fund has also been established under the UN Framework Convention on Climate Change (UNFCCC) as an operating financial mechanism of the Convention. Overall, under the UNFCCC, developed countries have committed to mobilizing US$100 billion per year by 2020 to support developing countries. Mechanisms that price carbon emissions such as carbon trading and climate credit schemes raise significant funds for developing countries to invest in projects to address climate change. Green bonds have gained considerable prominence in recent years as a private source of climate finance with issuance reaching US$95 billion in 2016 and the potential to grow to US$620 - US$720 a year by 2035. Financing solutions relevant to SDG 13 are listed below.
Carbon markets aim to reduce greenhouse gas emissions cost-effectively by setting limits on emissions and enabling the trading of emission units.
Climate Credit Mechanisms
Market mechanisms that enable entities, for which the cost of reducing emissions is high, to pay low-cost emitters for carbon credits that they can use towards meeting their emission-reduction obligations. An example is the Clean Development Mechanism.
Approach for projects, organizations, entrepreneurs, and startups to raise money for their causes from multiple individual donors or investors.
Debt for Nature Swaps
Agreement that reduces a developing country’s debt stock or service in exchange for a commitment to protect nature.
Disaster Risk Insurance
Disaster risk insurance schemes cover—against a premium—the costs incurred by the insured entity from extreme weather and natural disasters.
Environmental Trust Funds
Legal entity and investment vehicle to help mobilizing, blending, and overseeing the collection and allocation of financial resources for environmental purposes.
Bonds where proceeds are invested exclusively in projects that generate climate or other environmental benefits.
Investments made with the intention to generate a measurable social and environmental impact alongside a financial return.
Governments and civil society groups use lotteries as a means of raising funds for benevolent purposes such as education, health, preservation of historic sites and nature conservation.
Payments for Ecosystem Services
Payments for ecosystem services (PES) occur when a beneficiary or user of an ecosystem service makes a direct or indirect payment to the provider of that service.
Guarantees can mobilize and leverage commercial financing by mitigating and/or protecting risks, notably commercial default or political risks.
Social and Development Impact Bonds
A public-private partnership that allows private (impact) investors to upfront capital for public projects that deliver social and environmental outcomes in exchange for a financial interest.
Taxes on Fuel
The sale tax any individual or firm who purchases fuel for his/her automobile or home heating pays. Fuel taxes can reduce the consumption of fossil fuels and greenhouse gas emissions while generating public revenues.
Taxes on Renewable Natural Capital (water; timber)
Any fee, charge or tax charged on the extraction and/or use of renewable natural capital (e.g. timber or water).
Voluntary Standards (finance)
Standards applicable to the financial sector that capture good practices and encourage the achievement and monitoring of social and environmental outcomes.