Multilateral Development Banks (MDBs) need to change their operational orientation to focus on the capital that can catalyze the climate transition: Mark Carney

At the plenary session on ‘Financing the Climate Transition’ held at the B20 Summit 2023 on August 26th at the Taj Place, Mark Carney, UN Special Envoy for Climate Action and Finance, Co-Chair, GFANZ and Chair and Head of Transition Investing, Brookfield Asset Management, highlighted that we will require an enormous amount of capital to finance the climate transition that is needed. He added, ‘We need to focus on transition finance, particularly for the challenging hard-to-abate sectors and the workers and communities associated with these sectors.’

Mr. Carney highlighted that around 100-150 billion USD should flow yearly from developed countries to emerging economies to help them transition. Governments in emerging economies will have an important role to play in creating an enabling ecosystem by establishing regulations that support deployment of nature-based solutions, reduce reliance on fossil fuels, increase renewable energy adoption and encourage development of carbon markets.

The panel was moderated by Lynn Forester De Rothschild, Chief Executive Officer, E.L. Rothschild and Founder & Co-Chair, Council for Inclusive Capitalism, UK who thanked the B20 for playing a very important role in providing key recommendations for G20 governments. She stated, ‘We need to think of the climate transition as both an obligation and as an opportunity. We need vital partnerships between private and public markets and various stakeholders to succeed.’

Bernard Looney, Chief Executive Officer, BP, UK mentioned ‘To address climate transition you need to go where the emissions are. We cannot decarbonize the hard-to-abate sectors without working with them. We cannot solve the challenges of these sectors by merely investing in renewables.’ He highlighted that the transition must be swift, well-organized and should prioritize energy security, access and affordability.

Mr. Uday Kotak, Chief Executive Officer, Kotak Mahindra Bank, India stated that ‘We have no choice but to go beyond capital that expects returns. Capital that is ready to take losses - this needs to come from businesses. We also need to ensure that the solution is not worse than the problem and doesn't make it worse in the long term.’ He also mentioned that funding for clean technology initiatives must stem from businesses in collaboration with governments. Governments should offer loss guarantees through gap funding and this will require a substantial capital pool to be established for this purpose.

Mr. Mark E Tucker, Group Chairman, HSBC Holdings Plc, UK mentioned, ‘Globally there is a lot of movement on innovative mechanisms. Government de-risking is important, and government has a key role to play in enabling and developing ecosystems where financiers and industry can work together to deliver on the climate transition. Mr. Tucker stated that businesses must adapt to new future models and mentioned that HSBC has pledged to provide 1 trillion USD by 2030 towards climate transition.

Ms. Verena Lim, Chief Executive Officer-Asia & Member-Global Management Committee, Macquarie Group, Singapore stated, “There has been an increase in climate finance recently and while global investments need to triple by 2030 - there is strong investor interest in funding the transition.” She also mentioned that private capital needs to accelerate deployment in mature technologies like solar or wind to provide clean and low-cost electricity especially in developing countries. Support for the commercialization of emerging technologies is crucial and requires the establishment of a dedicated ecosystem.

Mr. T V Narendran, Chief Executive Officer and Managing Director, Tata Steel Ltd, highlighted, “Steel will play a critical role in the future, necessitating a global strategy for its decarbonization. Solutions are vital for the growth of hard-to-abate sectors. The transition process will span multiple decades and demand country-specific approaches based on diverse factors.” The transition of hard to abate sectors such as steel and cement will require enabling policy frameworks, well designed carbon markets and infrastructure support.

26 August 2023

New Delhi