Session 3 - Investing in the green transition and closing investment gaps

Oct 11, 2024 | 9:30 AM - 11:00 AM
Auditorium

Description

An estimated USD 6.9 trillion per year worth of public and private investments are needed through 2030 to meet global infrastructure development and climate objectives simultaneously. Climate policies alone are not sufficient to mobilise the required capital. Strengthening the enabling conditions for private investment in the transition requires action across a range of policy and regulatory areas, including investment policy, tax policy, industrial policy and public governance, among others. Policy coherence, stability and predictability are prerequisites for the success of more targeted policy interventions. This session will focus on how to promote cross-border investments and capital flows in low-carbon assets and activities. It will also shed light on the progress achieved by companies engaged in due diligence for Responsible Business Conduct through the development of programs to identify, prevent, and mitigate adverse environmental impacts in their role as investors.

Presented by

Jimena Chinchilla

Deputy Director of Investment and Cooperation

Ministry of Foreign Trade, Costa Rica

https://www.linkedin.com/in/jimena-chinchilla-22a982a1/

ADM

Amélie de Montchalin

Ambassador

Permanent Representative of France to the OECD

https://www.linkedin.com/in/am%C3%A9lie-de-montchalin-7113731b9/

Jeroen Huisman

Director for Sustainable Finance

Systemiq

Lisa Sachs

Director

Columbia Center on Sustainable Investment

https://ccsi.columbia.edu/directory/lisa-sachs

https://www.linkedin.com/in/lisa-sachs/

Rupert Schlegelmilch

Chair

OECD Investment Committee

https://www.linkedin.com/in/rupert-schlegelmilch-3039b2182/

Andrea Webster

Financial system transformation lead

World Benchmarking Alliance

https://www.worldbenchmarkingalliance.org/team/andrea-webster/

https://uk.linkedin.com/in/andrea-webster-27193629

Session 3 - Key Resources

The rapid and deep emissions reductions needed to keep global warming to 1.5°C rely critically on an immense scaling-up of investment in clean energy technologies. The cost of capital plays a key role in determining investment decisions and, when elevated, can pose a significant barrier to accelerated climate action. The high capital expenditure needs of clean energy technologies make them more vulnerable to changes in the cost of capital than fossil fuel alternatives. This paper provides an overview of the cost of capital as a barrier to clean energy investment and depicts the key risk factors that determine the cost of capital for specific investments. It shows how, particularly in developing countries and for new and emerging technologies, a high cost of capital can significantly stifle investment, and calls on governments to implement better risk sharing mechanisms to overcome this barrier.

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The Clean Energy Finance and Investment Roadmap of Thailand outlines key actions to unlock finance and investment in two clean energy sectors: renewable power, with special attention to small-scale renewable power systems, and energy efficiency in buildings, with a focus on cooling applications. The report also includes a roadmap action plan, suggesting non-prescriptive recommendations and actions that the Government of Thailand, financial institutions, energy service companies, academia and the international development community active in the country could undertake to foster clean energy investments in Thailand.

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The report outlines the aggregate trends in annual climate finance provided and mobilised by developed countries for climate action in developing countries over the period 2013-2022. It presents these trends by source of finance, climate theme, sector, income group and type of financial instrument. Additionally, the report explores adaptation finance trends in relation to the Glasgow Pact's call for developed countries to double adaptation finance by 2025 and offers insights into the growing significance of multilateral providers in the climate finance landscape.

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This working paper provides a granular overview of investments into low-carbon infrastructure, both in the real economy and financial market. The descriptive analysis shows that there is room to scale up cross-border infrastructure investment and to shift investment into low-carbon assets. Specifically, low-carbon cross-border investment can be increased by shifting infrastructure investments, that currently flow into the financial economy, to the real economy and by incentivising the use of financing instruments, i.e., securitised products, that bundle projects and meet different liquidity tastes of investors. The analysis also highlights the important role of foreign direct investment (FDI) into infrastructure from foreign real economy companies.

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A comprehensive investment facilitation framework is necessary to create favourable conditions for foreign direct investment (FDI) to contribute to host economies’ inclusive and sustainable growth. This report analyses investment facilitation frameworks in five selected Southern Neighbourhood countries (Algeria, Egypt, Jordan, Morocco and Tunisia), benchmarked against key standards enshrined in the Sustainable Investment Facilitation Agreement (SIFA) signed between the European Union (EU) and Angola in late 2023. This report informs the EU and interested partners of the region on the potential of future SIFA negotiations with the EU with a view to improve local investment climates and promote mutually beneficial investments.

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Infrastructure damages caused by increasingly severe extreme weather and slow onset events demonstrate how climate change affects infrastructure. Enhancing the climate resilience of infrastructure will be critical for achieving sustainable development, especially for developing countries. This report was prepared to inform G20 policy makers about approaches that can be taken to advance financing for climate-resilient infrastructure and was welcomed at the G20 Finance Ministers and Central Bank Governors meeting in July 2024.

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This report explores how institutional investors can apply risk-based due diligence as recommended by the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and help them prevent and mitigate adverse climate impacts associated with their investee companies on society and the environment. It provides practical recommendations on how to conduct due diligence as a way to connect climate commitments at portfolio level with real-economy impacts and draws on other frameworks and tools for assessing, managing or disclosing climate impacts associated with investments.

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This report explores evidence-based action areas to increase and accelerate the mobilisation of private finance for climate action in developing countries, and the role of international public finance providers in doing so. It draws on best-available data to provide disaggregated analysis of the sectoral, geographic and other features of private finance mobilised by public climate finance and presents key economy-wide, sector-specific, and institutional challenges to private finance mobilisation. The analysis is anchored in the context of the USD 100 billion climate finance goal, initially set for 2020 and extended to 2025, while also providing insights related to mobilising private finance for climate action in developing countries more broadly.

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