What are some of the ways that climate finance can be more transformational? Are there pathways to drive action for climate investments that focus on varied needs and contexts, as well as actively inclusive in shaping how funds are mobilized and disbursed?
The Transformational Change Learning Partnership (TCLP), hosted by the Climate Investment Funds (CIF), worked collaboratively to develop a resource that sets out how the climate finance sector can be more explicit in delivering transformational investments. Since 2017, the TCLP has convened policymakers, evaluators, project designers and managers to generate new thinking and approaches on embedding transformational change in climate finance.
The study titled “Principles for Transformational Climate Finance to Advance Just and Equitable Solutions” defines transformational climate finance as an approach to financing climate action that “prioritizes catalytic investments, promotes systemic changes in financial systems to align financial flows with the Paris Agreement and delivers resources to sustainable climate investments.”
The guidance note also emphasizes the need to address the root causes of climate change and climate vulnerability by pointing to the historical emissions and wealth accumulation of developed countries, and how these impact on national development needs in low- and middle-income countries. Proactively engaging with marginalized communities and vulnerable groups is also essential. Watch the TCLP lead and CIF Senior Evaluation Specialist, Michael Ward, explain the need for more transformational approaches to climate finance.
The paper identifies seven guiding principles for transformational climate finance:
Another area of focus is the importance of providing de-risked, small, and decentralized solutions. As the paper explains “Perceptions of risk and higher transaction costs associated with community-based initiatives need to be reconsidered in relation to the value created by responsive and inclusive climate action and how this addresses power inequities.” It is these community-based initiatives that could benefit most from transforming climate finance delivery, as Michael Wards explains in this video below:
This study, which is informed by CIF and the TCLP’s evidence and learning on climate finance, provides a foundation for collaboration and discussions on transformational climate finance with the multilateral development banks, country partners and the wider climate community. These discussions and the work on transformational climate finance continue to expand with more guidance notes planned in the coming months.
There is growing recognition that tackling the climate crisis and related social and environmental challenges will require fundamental changes in human systems. Since 2017, the Transformational Change Learning Partnership (TCLP) has advanced thinking and practice on transformational change in the context of climate change programs and projects. This paper focuses on the role of the climate finance community. Concerted efforts are needed to make climate finance a catalytic force in mobilizing large-scale investment in climate action, while also ending subsidies on fossil fuel use and other destructive activities and realigning global financial flows with a vision for inclusive, equitable, resilient and sustainable development. The document also frames out key pathways for action to advance transformational climate finance, setting the stage for expanded activities by TCLP and other partners.