In a critical step towards addressing the climate crisis, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has introduced ten principles aimed at guiding policymakers, regulators, and private financiers in mobilizing resources for the United Nations Sustainable Development Goals (SDGs), particularly those related to climate action. The release of these principles, outlined in the Sustainable Finance: Bridging the Gap in Asia and the Pacific report launched on October 6, 2023, marks a significant milestone in the quest for sustainable development in the region.
Asia and the Pacific have been at the forefront of global climate discussions, facing the twin challenges of rising emissions and increasing energy demands. However, financing climate action in the region has lagged behind due to macroeconomic hurdles and concerns about public debt sustainability.
The ten principles for action put forth by ESCAP are as follows:
- Developing New Climate Finance Partnerships: Encouraging collaboration among governments, private sector entities, and international organizations to mobilize resources dedicated to climate initiatives.
- Developing Effective NDC Financing Strategies: Ensuring that Nationally Determined Contributions (NDCs) are accompanied by robust financing strategies, enabling countries to meet their climate targets.
- Developing Policy Coherence and Capacities Across Key Ministries: Coordinating efforts across various government departments to create a coherent policy framework for climate finance.
- Taking Decisive Regulatory Action Towards Net Zero: Implementing regulatory measures that steer capital flows in Asia and the Pacific towards achieving Net Zero emissions by 2050.
- Investing in Financial Personnel’s Capacities: Enhancing the skills and knowledge of financial professionals to navigate the complexities of sustainable finance.
- Enhancing Data Availability: Promoting investment in sector-specific financial data to support informed decision-making in green investments and net-zero projects.
- Committing to Credible Net Zero Pledges: Encouraging nations to commit to Net Zero emissions by 2050 while establishing clear transition pathways, including 2030 milestones.
- Increasing Local-Currency Financing: Promoting investments in energy transition projects, green technologies, and net-zero ventures denominated in local currencies to reduce currency risk.
- Expanding Concessional Financing and Risk-Sharing: Collaborating with multilateral development banks, bilateral development financial institutions, and public development banks to increase concessional financing and risk-sharing for climate projects.
- Investing Time and Effort in Project Preparation: Recognizing the importance of diligent project preparation, which can help attract investments and accelerate the deployment of sustainable initiatives.
ESCAP’s report underscores that despite a growing demand for climate financing, many countries in the region have yet to assess their financial needs to meet their climate commitments. Moreover, the economic toll from climate-related disasters and natural hazards is expected to rise significantly if action is not taken promptly.
The report further emphasizes that there is adequate capital and liquidity to bridge the global financing gap for sustainable finance. However, deploying this capital faces several challenges. The ten principles set out by ESCAP are designed to address these challenges and steer Asia and the Pacific toward a greener, more sustainable future.
The ESCAP’s ten principles for action offer a comprehensive roadmap for policymakers, regulators, and financiers to facilitate climate action in the Asia-Pacific region. These principles not only address the immediate financing needs but also lay the foundation for sustainable and resilient development, aligning with the global commitment to combat climate change and achieve the UN’s Sustainable Development Goals.
