Climate change: why faster growth is needed in green financing that helps cities become more resilient to extreme climate

Climate change adaptation is an underdeveloped area within blended finance for climate compared to mitigation transactions, but this is changing

Developing nations will need to invest between US$160 billion and US$340 billion annually by 2030, and more funds are being raised based on the theme of adaptation

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Sheep graze on the Guadiana’s dry riverbed as part of the river dried up and gave way to dry land in Villarta de los Montes, in the central-western Spanish region of Extremadura, on August 16, 2022. Extreme weather events such as heat waves and floods have cost some 195,000 lives and nearly 560 billion euros in Europe since 1980, according to the European Environment Agency (EEA), which called to take new measures against the climate change. Photo: AFP

Published: 2:47pm, 18 Jul 2023Updated: 8:54pm, 18 Jul 2023

Global green bond issuance to fund pre-emptive action against climate change is growing and could receive a further boost from government partnerships with the private sector to help fill the US$340 billion of annual financing required by the decade’s end, experts say.

Developing nations will need to invest between US$160 billion and US$340 billion annually by 2030 on projects to adapt to climate change, according to a report published last November by the United Nations Environment Programme. The outlay required rises to between US$315 billion and US$565 billion by 2050.

Climate-change adaptation is distinct from climate-change mitigation as it is a process of adjusting to the current and future effects of climate change versus mitigating actions that make climate change less severe by preventing or reducing emissions.

More climate-adaptation deals are in the pipeline as national governments and multilateral development institutions design “blended finance” structures to increase private sector participation, said Daniel Hanna, global head of sustainable finance at British bank Barclays.

Barclays’ Head of Sustainable Finance Daniel Hanna, at Barclays’ offices in Cheung Kong Centre, Central. Photo: Jonathan Wong

“We will likely see both sovereign and supranational finance institutions raise more funds on the international capital markets based on the theme of adaptation,” he told the Post. “We will also see more blended finance-type structures to catalyse the private sector’s participation.”