Nordic countries lead in mobilising climate finance

“The Nordic countries have an excellent opportunity to maintain and develop their leading position in mobilising climate finance”, says Peer Stiansen, Chairman of the Nordic Council of Ministers’ Nordic Working Group for Global Climate Negotiations (NOAK).

NOAK recently published a report entitled “Mobilising climate finance flows, Nordic approaches and opportunities”. The report maps current financial support needs, as communicated via developing countries’ planned greenhouse gas reduction projects, and identifies potential support gaps where Nordic finance actors could add value.

“This will involve smart use of public money and policy to crowd in private financial flows, and close cooperation between Nordic financial actors.”

Peer Stiansen

Chairman of the Nordic Working Group for Global Climate Negotiations

The group’s overarching goal is to contribute to the adoption of a global climate agreement with binding and ambitious goals.

Photo by IISD/ENB | Kiara Worth

The aim of NOAK of and its report is to contribute to an ambitious and effective implementation of the UNFCC and its Paris Agreement, with a Nordic perspective. The Paris Agreement entered into force in late 2016 and offers guidance to financial institutions in two ways: to finance projects that will help to limit global mean temperature rise to “well below” the 2 °C target, and to mobilise climate financing for developing countries from a variety of sources, both public and private.

Ways to implement the Paris Agreement
The report proposed to accelerate the Nordic countries’ effort to help developing countries turn their planned greenhouse gas reduction targets into bankable investment programmes for climate compatible development. The key stakeholders for this are the Nordic ministries and agencies in charge of development cooperation and climate finance, supported by the Nordic finance institutions.

The study further suggests that the Nordic countries should look for opportunities to strengthen joint Nordic finance institutions to shift away from investments that add to climate change.

A third proposal was to set up a Nordic climate investment fund and outline what “well below two-degree investment criteria” mean in practice for investment options and decision-making.

The Nordic countries should, in the view of the report, remain pioneers in green bonds and look for ways to expand the market while keeping the environmental integrity. The key stakeholders here are the Nordic finance institutions in collaboration with institutional investors, private sector and local governments, and supported by Nordic actors working on environmental integrity and disclosure.

The report also recommended Nordic authorities in charge of financial sector regulation to assess the early lessons learned of the regulation introduced in France, and especially recommendations provided by the Financial Stability Board to remove barriers and drive the required shift in investments to a low or no carbon future.