The Finance Working Group (FWG) of the independent Global Stocktake (iGST) is an open partnership bringing together a range of expert perspectives from the global north and south on the progress made toward financing climate action. The FWG aims to support and independently benchmark the official UNFCCC Global Stocktake (GST) process.
The Finance Working Group is organized around two complementary themes: the consistency of finance flows with low-emission, climate-resilient development, as outlined in Article 2.1(c) of the Paris Agreement; and the provision of support to developing countries to mitigate and adapt to climate change.
The group is co-chaired by Charlene Watson of the Overseas Development Institute and Raju Chhetri of Prakriti Resources Centre.
Case studies on consistency of finance flows
Article 2.1 (c) of the Paris Agreement — on the consistency of finance flows with low emission climate-resilient development pathways — is the third long-term goal of the agreement and is essential to achieving the others. Understanding where countries are in the process of aligning financial flows with climate action will be critical in assessing progress and raising ambition. This series of case studies use a novel framework to assess consistency and provide a platform for further conversations:
Financing climate action: iGST discussion series
The GST calls for the assessment of collective progress toward achieving the long-term goals of the Paris Agreement. This assessment could be made more difficult by the lack of clear guidance or consensus for a subset of finance themes. This could be for a variety of reasons, including methodological challenges, political constraints, data availability, or otherwise. This series of thought-provokers from the Finance Working Group provides an overview of challenges and opportunities related to key themes:
Why the Global Stocktake?
The GST is a core mechanism of the Paris Agreement, essential to fulfilling its long-term goals on mitigation, adaptation, and finance. It was created to review collective efforts and increase climate action, support, and international cooperation. The three-step GST process of information gathering, technical assessment, and political dialogue necessitates reflection by all stakeholders, across all aspects of climate finance. For example:
- In assessing collective progress toward achieving the Paris Agreement’s finance goals, it will be necessary to directly address the balance between adaptation and mitigation finance and the prioritization of the most vulnerable countries, including the least developed countries and small island developing states. The GST must also speak to the finance needs as articulated by recipient countries as well as the impact of climate finance flows, in addition to its absolute provision.
- The Katowice decisions in 2018 made clear that the GST will also consider collective progress toward making finance flows consistent with low-emission, climate-resilient development, as articulated in Article 2.1(c) of the Paris Agreement. This decision provides an opportunity to unpack progress toward shifting the trillions of dollars needed to underwrite a green transition away from polluting investments and into climate-compatible growth, as well as to examine the integration of material climate risks into all investment and capital allocation decision-making.
- The embedding of loss, damage, and equity in the GST will force countries to look at these issues in both the provision and allocation of climate finance.
This stocktaking exercise comes at a key moment for climate finance. The GST, due to start in 2022 and be completed by 2023, is a waypoint on the route to a new, larger 2025 climate finance goal, which will be negotiated largely between 2022-2024. The GST assessment affects and is affected by state and non-state actors from developed and developing countries alike. Effective cooperation of state actors will be key in raising ambition and setting new finance goals and targets. Non-state actors have a responsibility too, ranging from input into the official information gathering process of the GST, to shaping the discussions and narratives around key climate finance themes.
To capitalize on the GST opportunity to progress a post-2020 climate finance agenda, we must start now.