Vulnerable economies call on rich nations to avert global climate-Covid economic threat

Sun Online Desk

9th July, 2021 10:09:43 AM printer

Vulnerable economies call on rich nations to avert global climate-Covid economic threat

 Vulnerable economies on Thursday called upon the rich nations to avert global climate-Covid economic threat.

The 48 most vulnerable economies demand “2020-2024 delivery plan” for the missing $100 billion annual Paris Agreement climate assistance.

Led by Bangladesh as chair of the V20, the world’s most climate vulnerable economies met virtually as heads of state and government, ministers of finance and economy, together with leaders of the United Nations, partner economies and the global financial system to address the compound, destabilizing effect of climate disasters and the Covid-19 pandemic on low- and middle-income economies.

The ‘Vulnerable Twenty’ (V20) Group of Finance Ministers released a Communique that called for leadership by industrialized nations and cooperation to urgently transform and align the global economic system with the goals of the Paris Climate treaty for a more robust, greener, and equitable recovery.

The first ‘Climate Vulnerables Finance Summit’ was opened by Bangladesh Prime Minister Sheikh Hasina.

She said every country must pursue an ambitious target to curb Greenhouse gas emissions to keep global temperatures from rising to 1.5ºC.

"This target has been approved through a global consensus, but we have not observed any visible action”, said the Prime Minister adding that “I urge all, particularly the G20 nations to show their actions.”

She indicated that the tragedies faced by the most vulnerable will haunt the world economy if urgent action is not taken and the economic and financial support needs of the V20 are not met, stating that “Developed nations need to articulate a concrete delivery plan on how the shortfall of annual climate finance will be met between 2020 and 2024.

They should facilitate the green recovery of the Climate Vulnerable Forum (CVF)-V20 by providing monetary assistance, transferring technology, and building capacity.

Dedicated support in the form of guarantees required for reducing the cost of capital and encouraging private sector participation.

Affluent nations must help CVF-V20 countries by closing the existing financial gaps including in protection against climate-induced disasters. To this end, our countries need financial support to introduce smart insurance premium subsidies and capitalization of insurance products.”

The V20 Communique urged individual developed countries that have failed their contributions towards ensuring the collective $100 billion per year in climate finance support to take urgent steps to fulfil their part of the agreed funding well prior to COP26, for the sake of international climate action and cooperation.

Developed countries were specifically called upon to indicate how and when they will catch up with a concrete ‘Delivery Plan’ outlining the way in which the entirety of the agreed financing will be met during and over the years 2020-2024.

The V20 also urged developed countries to align their contributions under UN agreements by allocating public international climate finance to ensure at least 50% of resources for urgent adaptation needs as the climate crisis continued to disproportionately plague economies most exposed to its risks amid the COVID pandemic’s shocks.

The Communique indicated that annual levels of loss and damage caused by climate consequences in the V20 were already more costly than any amount of climate finance received or promised by the richest, most responsible nations.

The V20 also highlighted several joint initiatives with the G20, Asian Development Bank, World Bank, and UN agencies it is spearheading to respond to actual climate financing needs of economies systemically vulnerable to climate change, including:

A new program of national ‘Climate Prosperity Plans’ to diffuse climate threats on economic progress and seize transition opportunities by prioritizing climate-resilient and low carbon development investments while maximizing socio-economic benefits for 1.2 billion people living in countries most vulnerable to climate change.

A ‘Climate Prosperity Recovery Agenda’ towards fit-for-purpose Bretton Woods system for climate frontline economies, which pointedly called upon the IMF to practice more systematic surveillance of climate risks of all kinds so as to hold accountable those that finance pollution rather than focus on further penalizing economies facing disproportionate climate risks, and to ensure better access to crisis assistance.

The Accelerated Financing Mechanism (AFM) to bring down the cost of capital by unlocking at least USD 30 billion of private sector investments through optimized financial de-risking for resilient infrastructure and renewable energy, working through MDBs and national banks.

The Sustainable Insurance Facility to provide climate-smart insurance for micro, small and medium-sized enterprises (MSMEs) and part of the InsuResilience Global Partnership to provide financial protection for 500 million people in vulnerable developing countries by 2025.

The V20 encouraged economic partners and multilateral financial institutions to cooperate for the success of these programs while also launching its ‘Vision 2025.’

This V20 Vision sent a clear signal on vulnerable economies’ intentions to leverage trillions in new green investments, overcome capital cost challenges, close the financial protection gap, boost job growth in a just transition for workers, and, to rapidly deploy renewable energy to power economic activities.

Bangladesh also presented the first V20 ‘Mujib’ Climate Prosperity Plan – Decade 2030, named in honour of the birth centenary of the country’s ‘Father of the Nation’, Sheikh Mujibur Rahman, which aims to secure its economic future threatened by climate risks while supporting robust delivery of the Sustainable Development Goals.

A blueprint for future Climate Prosperity Plans to be implemented among V20 countries, the V20 jointly highlighted how implementation of prosperity plans would create important opportunities for green economic and resilient cooperation and investment partnerships.

Commenting on the Climate Prosperity Plan announcement at the V20 Summit, Prime Minister Hasina said the CVF initiated a new Climate prosperity program to move from climate vulnerability to climate resilience and then turn climate resilience into climate prosperity.

"The program aims to leverage green growth opportunities to the maximum. Through this summit, I would urge Honorable Finance Ministers, Development Partners, International Financial Institutions, and Multilateral Development Banks across the globe to find innovative financing solutions for climate prosperity.”

Presiding the V20 Ministerial Dialogue that put forward the Communique, Bangladesh Finance Minister and V20 Chair AHM Mustafa Kamal said they are setting a clear pathway through the dual crises of COVID-19 and climate towards a just and green recovery through the Climate Prosperity Agenda.

He said governments and multilateral organizations must seize every opportunity to save the planet and strengthen protection for the most vulnerable communities.

"This V20 Summit provides the opportunity to chart a pathway forward, with speed and scale for bold and concerted new economic and financial responses that truly deliver for vulnerable people and economies around the world.”

The V20 Summit was opened by the Heads of State/Government of Bangladesh, Ethiopia, Colombia, Costa Rica and the Marshall Islands, together with some 30 finance and economy Ministers and senior representatives of the V20 and G20, the UN Secretary-General Antonio Guterres, U.S. Special Presidential Envoy for Climate John Kerry, World Bank President David Malpass, 8th Secretary-General of the United Nations and Chair of the Board of the Global Center on Adaptation Ban Ki-moon, the heads of the Asian Development Bank, Asian Infrastructure Development Bank, European Investment Bank, Global Environment Facility, Green Climate Fund, as well as high level representatives of the International Monetary Fund and a range of UN and international partners of the V20.

It was also indicated by Bangladesh during the V20 Summit that the CVF-V20 member states are working through a series of regional and global member dialogues to prepare with a view to ultimately launch at UNFCCC COP26 the ‘Dhaka-Glasgow Declaration’ to further put forward the perspectives of the climate threatened nations for a successful outcome to the OctoberNovember 2021 Glasgow conference.