Unlocking climate finance central to driving net zero and resilience, according to new report

The current flow of global climate finance is insufficient. Unlocking capital requires projects to be better aligned with investors’ requirements, according to a report from the British Expertise International (BEI) Climate Finance Working Group.

The report, ‘Accelerating climate finance’, has been co-authored by Mott MacDonald.

It calls for governments – from national to local – to develop stronger project preparation and delivery capabilities. It also highlights investors’ frequently poor understanding of potential opportunities, resulting from limited technical and market knowledge.

The current gap in capability and communication between project proponents and investors – climate finance demand and supply – means that there is a massive shortfall in funding for projects necessary to reduce carbon emissions and build resilience.

The report calls for demand side changes, to improve understanding of investors’ requirements, develop strong business cases and manage risks effectively. Project proponents are frequently unaware of the range of potential sources of funding available.

On the supply side, the report also highlights finance providers’ poor understanding of sectors and markets as a blocker to investment.

In many countries, greater effort is required to strengthen policy, governance and regulation, to provide a robust and transparent environment for investment.

The report also calls out the need for climate finance to promote a just transition towards net zero and resilience.

Mott MacDonald has drawn on its experience of supporting clients globally – including governments, businesses and projects – to secure finance and invest in climate-related market opportunities.

Virginie Fayolle, technical principal for climate finance, at Mott MacDonald, said: “Climate finance will play a central role in the global move away from fossil fuel dependency and the transition to low carbon. It is also essential for building resilience to the physical impacts of climate change.

“However, aligning global capital with local needs remains complex and there is much work to be done to enable countries to attract investment.”

The report features case studies of climate finance projects supported by the BEI members, including Mott MacDonald’s work with the Government of Nepal on its flagship programme Nepal Climate Change Support Programme 2 (NCCSP2). Through technical assistance to develop local planning and governance, employing hazard maps to prioritise and validate investments, the pioneering project has benefited over 300,000 people with over £7M of financial assistance provided to date.

Accelerating climate finance has been developed to support agencies including UK government, international governments, bilateral and multilateral development agencies, and private sector organisations. It is the first edition of the report from the BEI Climate Finance Working Group, with future versions planned to expand the visibility of capabilities in this critical area.

Read the full report here: Accelerating climate finance – a view from UK-based specialist providers – British Expertise International