Climate finance can become significantly more transformative by addressing systemic barriers to low carbon and climate resilient investments, according to a new World Bank report.
Although global climate finance has grown significantly in recent years, there remains a sizable gap between the public resources that are available and the investment needs to address climate change in developing countries.
The report makes the case that while stimulus packages to combat the coronavirus-induced economic slowdown can help countries shape a sustainable recovery, they will only be transformative if the limited public funding for climate action leverages substantially more funding from other sources.
“This is exactly the right time to look at how we can make climate finance more effective and more impactful,” says Marc Sadler, Practice Manager of the World Bank’s Climate Change Fund Management Unit. “The increased realization of economic benefits from clean development pathways allow climate finance spending to be much more catalytic. The critical levers identified in this report can – with strategic allocation of climate finance – unlock greater value for money and help countries build back better.”
The report identifies eight sets of climate levers and analyzes how climate finance can best be deployed to maximize their transformative impact for developing countries to achieve clean development goals. The eight climate levers are: project-based investments, financial sector reform, fiscal policy, sectoral policies, trade policy, innovation, carbon markets and climate intelligence.
The report proposes a set of recommendations for transformative climate finance, including:
- Employ a wider variety of financial instruments: Expanding the use of instruments such as policy-based finance, results-based finance, equity finance and guarantees can enhance the impact of climate finance deployed.
- Enhance leverage on a wider, systemic basis: Public climate finance should maximize leverage from private and government sources. The scope and impact of this leveraging should go beyond project boundaries to achieve economy-wide impacts.
- Link to long-term strategic planning: Financing decisions should be aligned with long-term strategies for low-carbon resilient development, while avoiding spending that is inconsistent.
- Invest in “climate intelligence”: Appropriate knowledge generation can have a powerful effect: include climate impact and vulnerability maps; early warning technologies; models for long-term scenario simulation and planning; and physical and transitional risk assessment tools.
“The climate finance system has made great strides in the past decade, increasing in both volume and impact,” says Jonathan Coony, World Bank Senior Carbon Finance Specialist and report co-author. “But circumstances have changed over that time and reviewing the programming of scarce public finance to deliver transformation at scale will be essential to help our clients shape a sustainable recovery.”
Transformative Climate Finance: A new approach for climate finance to achieve low-carbon resilient development in developing countries is available for download here. The report was launched as part of the Kickstarting the Sustainable Recovery series organized by the World Bank’s Climate Change Group in partnership with Innovate4Climate to shed light on how sustainable finance can be part of the COVID-19 recovery and help countries build back better and stronger.
Health, Jobs and Environment Top Personal Risk List
A new World Economic Forum/Ipsos survey found most adults are optimistic about accessing technology, digital tools and training in the next 12 months, but have serious concerns about the state of the climate, job market and global health. These findings ahead of the Davos Agenda week highlight the importance of leaders across the public and private sectors coming together to address the changes needed in a crucial year ahead.
According to the survey, the percentage of those expecting the availability of digital tools and technology to improve in 2021 exceeds the percentage of those who think it will get worse across geographies. This is most of all the case in Saudi Arabia (by 57 points), Peru (55 points), and India (48 points). Italy is the only country where, while the proportion of optimists is greater than that of pessimists by 3 points, the difference is not statistically significant.
Significantly larger proportions of people expect opportunities for training and education to improve in 2021 than to get worse in 12 countries — most of all in Saudi Arabia (by 45 points), Peru (44 points), Mexico (36 points), and China (36 points).
Image: IPSOS/World Economic Forum
However, there are global concerns with deteriorating health, loss of income or employment, and more frequent weather-related natural disasters – each perceived as a real threat by three out of five adults across the world.
Pessimists outnumber optimists on the other five issues measured: The pace of climate change (by 20 points); Employment opportunities (by 15 points); General health conditions (by 5 points); Inequality (by 4 points), and Relations between one’s country and other countries (by 2 points).
Expected Change in 2021 Image: IPSOS/World Economic Forum
The pandemic has accelerated systemic changes that were apparent before its inception. The fault lines that emerged in 2020 now appear as critical crossroads in 2021. The Davos Agenda will help leaders choose innovative and bold solutions to stem the pandemic and drive a robust recovery over the next year.
In regards to the Davos Agenda, Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum said: “In the context of the COVID-19 pandemic, the need to reset priorities and the urgency to reform systems have been growing stronger around the world. Rebuilding trust and increasing global cooperation are crucial to fostering innovative and bold solutions to stem the pandemic and drive a robust recovery. This unique meeting will be an opportunity for leaders to outline their vision and address the most important issues of our time, such as the need to accelerate job creation and to protect the environment.”
Key Trends Shaping the Global Economy in 2021
Accelerating inequality, remote work and greater tech market dominance are among the pandemic’s emerging trends that are likely here to stay for some years. Beyond managing the pandemic and vaccine rollout, these trends could shape a new era of fiscal, monetary and competition policy, as well as bigger government. Deglobalization is seen as the least likely of current trends to continue in the longer term; particularly as international coordination is key to resolving global challenges such as vaccine manufacturing and distribution. These are some of the findings of the World Economic Forum’s Chief Economists Outlook, published today.
The latest edition of the Forum’s Chief Economists Outlook is the outcome of consultations with leading chief economists from the public and private sectors. The report outlines the global economic outlook and lays out the priorities for policy-makers and business leaders to chart a post-pandemic recovery agenda that is fair, inclusive and sustainable.
Chief economists are impressed at the speed and scale of fiscal policy measures taken in the wake of the pandemic. However, as the global vaccination campaign picks up pace, they see the second half of 2021 as the optimal time to begin transitioning from general emergency spending to more targeted spending on future growth sectors. A majority suggest that taking action to pay down the significant national debts accumulated in the past year can wait until 2024 or beyond.
With central bank financing of public debt through quantitative easing now at the core of monetary policy in response to the crisis, chief economists believe this could lead to less central bank independence over time. Many also suggested that central banks should be pursuing environmental objectives directly through their asset purchases, which would represent a significant departure from past practice.
Most chief economists expect a brighter outlook as the vaccine helps accelerate the recovery, and as a new US administration contributes to tackling short-and long-term challenges, both domestically and globally, through revived multilateral institutions. However, most of those surveyed see virus mutations as the biggest risk for 2021, slowing efforts to contain the pandemic and leading to new lockdowns. Another concern relates to poorly calibrated policy responses that risk failing to differentiate between the deep structural impact of the pandemic on some sectors and the temporary halting of activity in other sectors.
“This report makes clear that precisely calibrated and coordinated fiscal, monetary and competition policy hold the key to global economic recovery and transformation. As the roll-out of vaccines picks up pace, there won’t be a better time for governments to work together and invest in a fair transition to a greener, more inclusive economy,” says Saadia Zahidi, Manging Director at the World Economic Forum.
Investment in Upskilling Could Boost Global GDP by $6.5 trillion by 2030
Accelerated investment in upskilling and reskilling of workers could add at least $6.5 trillion to global GDP, create 5.3 million (net) new jobs by 2030 and help develop more inclusive and sustainable economies worldwide. These are the key findings of a World Economic Forum report published today.
The report, Upskilling for Shared Prosperity, authored in collaboration with PwC, finds that accelerated skills enhancement would ensure that people have the experience and skills needed for the jobs created by the Fourth Industrial Revolution – boosting global productivity by 3%, on average, by 2030. The newly created jobs will be those that are complemented and augmented – rather than replaced – by technology.
“Even before COVID-19, the rise of automation and digitization was transforming global job markets, resulting in the very urgent need for large-scale upskilling and reskilling. Now, this need has become even more important. And – as we highlight in our new insight report with the Forum – upskilling is key to stimulating the economic recovery from COVID-19 and creating more inclusive and sustainable economies. To make this happen, greater public-private collaboration will be key. We’re delighted to be part of the Reskilling Revolution platform, which will help foster greater action, collaboration, accountability and progress on this important topic,” said Bob Moritz, Global Chairman, PwC.
One year of impact through the Reskilling Revolution
The research on upskilling supports the work of the Reskilling Revolution platform. Launched at the World Economic Forum Annual Meeting in Davos-Klosters in January 2020, the Reskilling Revolution set out to provide better education, skills and work to one billion people by 2030. In its first year, despite the pandemic and economic downturn, the platform’s initiatives are estimated to have benefitted more than 50 million people globally through rapid reskilling, upskilling and redeployment.
“Millions of jobs have been lost through the pandemic, while accelerating automation and digitization mean that many are unlikely to return. We need new investments in the jobs of tomorrow, the skills people need for moving into these new roles and education systems that prepare young people for the new economy and society. Initiatives like the Reskilling Revolution hold the key to converting ideas into action and creating the necessary coordination between the public and the private sectors. There is no time to waste,” said Saadia Zahidi, Managing Director, World Economic Forum.
After focusing in 2020 on setting up systems for rapid reskilling and upskilling – particularly vital in the midst of the pandemic – the initiative will continue to scale up its skilling work in its second year, while expanding its work in education, job creating investments and work standards.
“Investment in job creation, particularly climate-friendly jobs, is key to ensuring a Reskilling Revolution, and concerted action by governments and by business is needed urgently,” said Sharan Burrow, General-Secretary, International Trade Union Confederation (ITUC).
Developing a common language for skills
The absence of a shared language for skills poses a significant obstacle for the reskilling and upskilling agenda. An additional report by the World Economic Forum, also launched today, provides a common taxonomy for skills to help employers, government and learning providers more efficiently match talent to jobs and learning opportunities.
The Global Skills Taxonomy: A Common Language to Unlock the Reskilling Revolution includes specific definitions and categorizations of skills, creating a common taxonomy for the labour market to adopt, from online training providers and universities to hiring managers in companies and education ministries. It consists of an interactive taxonomy with definitions as well as recommendations for adoption to inform hiring, reskilling and redeployment practices in the workplaces of the future.
More about the Reskilling Revolution
The Reskilling Revolution works through three action tracks: Forum-led initiatives that engage the public and the private sectors in joint initiatives; public-sector and multistakeholder initiatives; and company-led initiatives.
The Closing the Skills Gap country accelerators are developing and implementing national strategies for reskilling and upskilling. Accelerators are active in 10 countries with Georgia, Greece and Turkey having recently established accelerators, and a further six accelerators under discussion. Commitments made by established and planned accelerator countries and their member companies to reskill and upskill their employees are expected to reach up to 47 million individuals.
Comprised of major online learning providers, including Udacity and Coursera, and reaching 200 million learners worldwide, the Forum-led Skills Consortium aims to elevate online learning as an accepted route to employment to provide more opportunities for reskilling, upskilling and redeployment. Building on this success, the Chief Learning Officer Community brings together industry leaders in learning and development to transform workplace learning for 2.9 million employees.
In the year ahead, the Consortium, the community of Chief Human Resources Officers and Chief Learning Officers of the Reskilling Revolution platform will work on the adoption of the skills taxonomy to help make skills the key currency of the labour market and create greater efficiencies in the labour market.
The Preparing for the Future of Work industry accelerators are estimated to have reached nearly 8 million employees to prepare them with future-oriented skills. In addition, the Chief Human Resource Officer Community brings together companies’ HR leaders to share best practices and mobilize action to provide better jobs and skills to a further 4 million employees.
Multistakeholder coalitions that joined the Reskilling Revolution, led by UNICEF and the ILO among others, have been focused on delivering better education and skills, through equalizing access to digital learning (mass teacher reskilling, or identifying, supporting and amplifying new approaches.
Company-led initiatives are helping future-proof their workforces, even in an economically constrained environment. Reskilling Revolution companies are leading new approaches to support their workforces, and their supply chains and communities through access to education, skills and better jobs. In addition to founding members of the platform, such as Adecco Group, LinkedIn and ManpowerGroup, the initiative recently welcomed new partner commitments from Royal Bank of Canada, Unilever and Verizon.
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