The conversations around the pressing need for climate action have intensified over the past few years. This can be attributed to the 1-degree Celsius increase in average temperature over the last century, which has led to several disasters. The global economic impact of climate-related natural disasters is estimated at USD 2.97 trillion.
Notably, these disasters disproportionately impact low- and middle-income countries, which are more vulnerable to the extreme weather outcomes of climate change. This includes countries like India, Sri Lanka and Maldives. The striking presence of developing Asian countries among the top countries at risk of climate disaster also points to the need for climate finance.
Challenges that require immediate attention
Battling climate change and developing strategies and action to combat it requires significant financing, especially for countries in the lower-middle income bracket. Meeting the Global South’s climate finance needs is a critical challenge that requires urgent attention and action. Below are some issues that impact the fate of the Global South:
- The developed nations have failed to stick to their commitment of channelling $100 billion annually by 2020 to developing countries to help them tackle climate change.
- Current commitments made by developed countries to provide climate finance through green climate funds have proved to be insufficient.
- The lack of transparency and accountability in current funding mechanisms poses a challenge to achieving necessary climate finance in the Global South.
- Robust monitoring and evaluation mechanisms are needed to ensure the appropriate use of funds allocated for climate finance.
- Greater coordination and collaboration among stakeholders is required to avoid duplication of efforts and leverage resources effectively.
G20 provides a platform for governments and stakeholders to develop solutions and leverage financial and technical resources to support climate action in the Global South.
India’s presidency of G20 is being seen as a ray of hope. India’s focus on tackling the inequalities in climate resilience can help find viable and sustainable solutions to the issue of inadequate climate finance.
Opportunities to come up with strategies to combat these challenges at G20
- Discussion with G20 finance ministers and central bank governors
In the past, India has emphasised the need for development partners for global prosperity. The G20 presidency is a way to push it forward. It has also talked about how the capital flow to the global south is insufficient, despite the intensified climate pledges. The G20 finance track comprises finance ministers, governors of central banks, and other finance groups who have discussed financial reforms in the past, and G20 is another opportunity to urge more cooperation for the better-equipped nations.
- Urging multilateral development banks to be more climate-responsive
Although MDBs can play a critical role in green funding, their capital flow to climate-ready projects has been insufficient. G20 has provided significant impetus by commissioning an independent review of MDBs’ capital adequacy frameworks. The G20 is encouraging MDBs to report on the recommendations of this review during the annual MDB meetings in Spring 2023, providing an opportunity for India’s G20 presidency to push for climate-smart MDB reforms.
- Highlighting the need for adaptation funding mechanisms
Adaptation funding mechanisms provide financial resources for communities and countries to adapt to the impacts of climate change. These mechanisms, typically channelled through international organisations like United Nations Framework Convention on Climate Change (UNFCCC) or national/regional governments, help with protection, recovery, and rehabilitation. Examples of these mechanisms include climate funds, multilateral development banks, national adaptation funds, public-private partnerships, and carbon markets. Despite their importance, a significant funding gap exists in addressing climate change.
While the Bali action plan 2007 talked about adaptation through risk finance instruments, clearer responsibility and goals must be defined to protect vulnerable nations. G20 is an opportunity to highlight the importance of a strong funding strategy that can address the consequences of climate change.
Conclusion
Given the Global South’s vulnerability to the impact of climate change, the urgent need for climate action and financing cannot be understated. The G20 provides a platform for governments and stakeholders to develop solutions and leverage financial and technical resources to support climate action in the Global South. India’s presidency of the G20 offers an opportunity to address the challenges of inadequate climate finance and develop strategies to combat them.
