Among the many topics discussed at this year’s G20 Summit, was climate and energy. The summit culminated in the issue of a joint declaration summarising the agreements reached and the plans adopted by the G20 leaders. With respect to climate and energy, the declaration was decidedly split between the “G19” and the US, acknowledging the US’ desire to pull out of the Paris Agreement and its continued support for the use of fossil fuels, albeit “more cleanly and efficiently”.

As part of the summit, the G20 leaders also adopted the G20 Hamburg Climate and Energy Action Plan for Growth. The Action Plan  identifies six key areas of development, which include developing strategies for long-term low greenhouse gas emissions; creating a reliable and secure framework for the transition of the energy sector, which involves the promotion of energy efficiency and the scaling up of renewable and other sustainable sources of energy; realising access to modern and sustainable energy services for all; and aligning finance flows.

Although only the last-mentioned area of development specifically refers to finance, a recurring theme throughout the whole Action Plan is the need to secure more private and public investment. And this seems to be one of the biggest hurdles to meeting the Paris Agreement targets and to transitioning to clean energy.

The Action Plan identifies that significant levels of investment, both private and public, will be required to modernise infrastructure in line with the Action Plan’s goals and to continue the scaling up of renewable and sustainable energy. In addition to achieving climate and energy goals, such investment is likely to also generate local growth, employment and help with poverty eradication. Addressing several Sustainable Development Goals at the same time!

The Action Plan specifically notes the role played to date by Multilateral Development Banks (MDBs) in mobilising “climate finance” and calls on them to further enhance their involvement. In 2015, the following MDBs, the African Development Bank, the Asian Development Bank, the European Bank of Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank and the World Bank Group, issued a joint statement at COP21 committing to work together to “substantially increase climate investments from public and private sectors to support”. This existing commitment is applauded but the Action Plan further encourages the MDBs to cooperate and coordinate efforts to finance ambitious energy and climate adaptation and mitigation projects and new technologies, and to identify how the private finance sector can assist with meeting the 2030 Agenda objectives and the Paris Agreement goals.

The investment question has also be considered in detail in the UN Green Finance Report published on 14 July 2017 by the UN Environment Programme (UNEP). The report identifies that the G20 in particular has made significant progress in mobilising private and public capital for climate and clean energy developments and initiatives. An example, is the recent joint commitment by eleven global banks to develop tools for assessing climate-related financial risks and opportunities; and to make more disclosures in relation to climate investments, making the sector more transparent. The banks are ANZ, Barclays, Bradesco, Citi, Itaú, National Australia Bank, Royal Bank of Canada, Santander, Standard Chartered, TD Bank Group, and UBS.

Commenting on the new Green Finance Report, the Executive Director of UNEP, Erik Solheim said: “This new research […] shows encouraging progress in this regard. From a record number of new green finance measures to ambitious plans for green finance hubs, we are seeing the smart money move to green financing.” He further added: “The challenge now is to rapidly increase capital flows to investments that will support our sustainable development objectives and create commercially viable green businesses for decades to come.”

The challenge has been set and the rewards are great economically, environmentally and socially. So let’s hope the investment starts to flow in the right direction!