The 25th session of the Conference of the Parties to the UNFCCC in Madrid called for the full operationalisation of the Paris Agreement. Europe is committing to green its policies both within and beyond the European Union (EU). Boosting green finance will be critical.
European top financial institutions such as the European Central Bank (ECB), the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), which are in a position to advance the European agenda, are joining the battle to curb climate change. This decision follows calls for a Climate Bank at the European level and the recommendation by the High-Level Group of Wise Persons that the EU should adopt a common approach to its external financial architecture and establish a single entity, the so-called European Climate and Sustainable Development Bank.
EU efforts to boost its climate action and finance should encompass not only the vital mitigation endeavour, but also greater attention to climate adaptation
Although global climate financing has increased by 60% over the period 2013-2018, this is not enough. Besides, more resources should be dedicated to climate adaptation, which has been neglected, in particular by European finance institutions. Multilateral Development Banks (MDBs), including EIB and EBRD, allocated only 30% of their 2018 climate financing to adaptation. EBRD and EIB allocated as low as 11.8% and 7.6% respectively to adaptation in developing countries.
The consequences of climate change, including droughts, floods, plummeting biodiversity and the loss of human lives, are undermining low-income and fragile countries’ development prospects. EU efforts to boost its climate action and finance should encompass not only the vital mitigation endeavour, but also greater attention to climate adaptation, as a means to foster climate justice and to achieve the SDGs also in low-income countries, and in Africa in particular. The new European Green Deal will have to live up to this challenge.