USAID vows to accelerate climate financing at COP27

USAID vows to accelerate climate financing at COP27

The US Agency for International Development (USAID) has announced its commitment to step up efforts towards expanding private investment in climate solutions. The promise was made at the latest climate summit, COP27, held in Egypt on 6-20 November and comes in the context of the findings of a number of researchers that there is very little time left to halt climate change and that a transition to sustainable and net-zero economies is possible provided that climate financing is significantly increased by 2030.

Global warming continues to worsen global climate conditions, triggering fatal flooding, heatwaves, and wildfires across many countries. Millions of hectares of forests disappear annually due to forest fires and nearly 2 billion people globally are directly exposed to 1-in-100-year floods. The growing risk of climate-related disasters makes it clear that countries should step up their efforts toward a sustainable and net-zero world. Recent research shows that climate financing needs to be increased by 590% reaching US$5 trillion annually by 2030 to enable the transition to a sustainable and net-zero world.

To address the challenge related to climate financing, at COP27 USAID declared its commitment to expand private investment in climate solutions and accelerate climate financing in order to make progress with its 2021 pledge to mobilize US$150 billion in climate finance by 2030. The agency announced the launch of a number of programs intended to enable this commitment to be met.

Sustainable Banking Alliance

USAID announced a Sustainable Banking Alliance to enhance the capacity of banks operating in USAID partner countries, assisting them to access climate finance. Pilot projects will be launched in Colombia and Rwanda with a budget of over US$1 million. USAID, in close collaboration with local banking associations, aims to improve regional capacity in climate risk reporting as well as in carbon accounting across financial portfolios. The organization plans to provide training on climate finance lending such as green bonds and resilient agriculture.

Call to Action on Adaptation

At COP 27, John Kerry, the Special Presidential Envoy for Climate (SPEC), and Samantha Power, USAID Administrator, launched a global Call to Action for businesses. In support of this call, 10 companies, Google, Gro Intelligence, Mastercard, Marsh McLennan, Meta, Microsoft, Pegasus Capital Advisors, PepsiCo., SAP, and WTW (formerly Willis Towers Watson), have already announced their new commitments towards improving climate resilience for clients and communities. The commitments pledged to be implemented include:

  • Expansion of early warning systems
  • Adoption of new climate financing products and services
  • Paradigm-shifting insurance solutions
  • Improvements towards climate-smart food systems

Climate Gender Equity Fund

To accelerate gender-responsive climate actions, at COP27 USAID pledged US$21.8 million, exceeding the commitment it made at COP26 which was US$14 million. This will be used to fund organizations working in more than 37 countries to target issues related to gender-based violence that is connected to climate as well as to increase gender equality in national climate commitments with a further aim to finance programs that promote green jobs for women.

Green Finance Pilot

USAID and the U.S. government’s Millennium Challenge Corporation also committed to cooperate to support potential green bonds that speed up the use of green finance mechanisms in developing countries.

See also: COP27 outcomes: a historical deal on loss and damage and disappointment over mitigation