Ladies and Gentlemen,
This year, amid the pandemic and the associated emergency that affects lives and livelihoods worldwide, we mark the fifth anniversary of the Paris Agreement and the adoption of the Sustainable Development Goals.
These two agendas go hand in hand.
The decisions we make now will determine the course of the next 30 years and beyond: emissions must fall by half by 2030 and reach net-zero emissions no later than 2050 to reach the 1.5C goal.
Science is clear: if we fail to meet these goals, the disruption to economies, societies and people caused by COVID-19 will pale in comparison to what the climate crisis holds in store.
And so our shared responsibility is equally clear: redouble our efforts to recover from the economic and social crisis, and get on track to achieve the SDGs and build a sustainable, inclusive and resilient future.
This will require an unprecedented mobilization by all of us. Global solidarity is imperative to defeat the virus and recover better.
I am encouraged by the growing number of countries committing to the net zero target.
The European Union has pledged to become the first carbon-neutral continent by 2050, and has aligned its COVID-19 recovery package with that objective.
The United Kingdom, Japan and the Republic of Korea, together with more than 110 other countries, have pledged carbon neutrality by 2050, and China has pledged to get there before 2060.
This means that 50 per cent of the world’s Gross Domestic Product, and about 50 per cent of global carbon dioxide emissions, are now covered by a net-zero commitment.
This coalition of governments, joined by many cities and businesses, is growing in strength because leaders from around the world understand we have no alternative and because they recognize the opportunities that are there to be seized.
But we are not there yet. No such bold commitments have yet been made to mobilize the finance necessary to achieve the net zero commitment by 2050 nor, more broadly, the SDGs.
Public development banks are uniquely positioned to play a leading role in this transformation, and I am encouraged by your stance towards the SDGs and the Paris Agreement during this Summit.
You can provide concessional finance where it is most needed, and leverage private finance for a shift of the whole financial system.
This is essential to reboot our economies and put them firmly on the path to a carbon-neutral, sustainable future.
We know what needs to be done. Let me highlight five key steps.
First, the mandates of public development banks need to be aligned with commitments to get to carbon neutrality by 2050 and the SDGs.
Setting climate finance targets is not enough.
In 2019, multilateral development banks set a collective target of at least $65 billion by 2025, with $50 billion targeted to low- and middle-income countries, and an increase in adaptation finance of $18 billion.
The African Development Bank allocated half of its climate finance to adaptation in 2019, an important step in the right direction
But more is needed from all, and faster.
I urge Ministers of Finance, who shape the strategic direction of national, regional and multilateral development finance institutions, to ensure that by COP 26, all these institutions agree to align their policies and portfolios with the 1.5°C goal and the SDGs, and that all investments take into account climate risks and are climate-resilient.
I also ask all public development banks to commit to exit from coal, domestically and abroad, and urgently phase out fossil fuel finance, and call on all governments to phase out fossil fuel subsidies, with clear time-bound targets and plans.
Invest instead in just transition programs that will leave no one behind, including SDG bonds, and incorporate gender and sustainability in all instruments.
A thorough rethinking of the mobilization potential, particularly by multilateral development banks, should be promoted urgently.
I also ask development finance institutions to collaborate and scale up programmes and financial vehicles that work, including to support countries that urgently need liquidity for recovery plans.
Second, public development banks need to do more to meet urgent needs in the face of dramatic falls in private flows and public revenue.
There is enormous demand for emergency funding with simplified approval processes guaranteeing fast access to finance.
Priority must be given to funding immediate relief measures, notably on public health and food security.
Ministers of Finance must recapitalize public development banks wherever necessary.
To support the shift of private finance and private investment in developing countries to make it low-carbon and climate-resilient, public development banks can play a very important role in de-risking by providing adequate guarantees or through other mechanisms, including taking first-loss positions.
Indeed, investments by public development banks have been shown to bring in more private finance instead of replacing it, as often feared.
Such investments also offer opportunities to improve governance and regulatory frameworks in the countries where they operate, providing certainty and bringing in much-needed capital.
Third, public development finance needs to dramatically increase support for adaptation and resilience, particularly for the most vulnerable groups.
Today more than 93 per cent of all climate finance goes to emission reduction efforts.
While adaptation finance from multilateral development banks has been growing, it is still just 23 per cent of all such funding.
We need to move from small-scale adaptation finance to large-scale, preventive and systematic adaptation support.
This means a dramatic increase in concessional finance.
It also means combating inequalities between and within countries. By reducing exposure of the most vulnerable to climate change, we enhance resilience for all.
And to reduce inequalities, we need to invest massively in public health, food security and education for all; in empowering women, girls and the most vulnerable; in supporting productive investment and employment; in access to energy; and in promoting human rights in general.
Fourth, we need more transparency to ensure that all finance -- public and private -- supports the SDGs and the Paris Agreement.
I urge countries to work together to adopt norms, standards and certification mechanisms for sustainable finance.
And I call on public development banks to adopt these tools to report on their success in aligning their own finance, and all the private finance they have mobilized, with the SDGs and the Paris Agreement.
I ask all financial authorities, including central banks and financial regulators, to incorporate climate risk in your functions, and make climate-related financial disclosures mandatory. Some central banks and regulators are already taking decisive steps, including in Brazil and New Zealand.
Fifth, we need better data.
We need public development banks to invest in the data and statistics that strengthen the capacity of developing countries to make the decisions that are needed.
And we need public development banks to openly share their data with decision-makers for better, coordinated action.
The decisions you make will send a signal to the global financial community and to policy makers around the world.
You can lead the way in transforming our approach to development finance.
You can help build the foundations of a new economy fit for the 21st century.
I thank you for sending that urgent message today -- and count on you to come to the Climate Ambition Summit on December 12th, and COP 26 next year, with concrete plans to realize our vision of a carbon-neutral, resilient, inclusive and sustainable world.