Financing early stage climate technologies was one of the key points of discussion at the third meeting of the G20 Sustainable Finance Working Group (SFWG) under the G20 India Presidency that concluded at Mamallapuram on June 21.
“There were discussions on financing early stage climate technologies. And also on how to scale up these operations and bring them into the market,” said Chandini Raina, Advisor, Department of Economic Affairs, Ministry of Finance, Government of India.
The key barriers to financing of climate-tech include the valley of death issue wherein the investments are concentrated at later stages of product development instead of early stages, geographical locations of the projects and their long timelines that add to the risks.
“We also had a discussion on transition finance, data and metrics for climate aligned investments,” Ms. Raina said. According to details shared by the G20 team, the discussion served as an experience-sharing forum for the participants to reflect on the availability of quality data, portfolio alignment of companies with climate and sustainability goals, enabling transition finance pathways, and provide guidance on the upcoming disclosure frameworks.
The agenda of the meeting was to firm up the deliverables as the contribution of the SFWG under the Indian G20 Presidency. For this, a draft document was shared with the membership prior to the meeting.
Ms. Joshi said that deliverables under the identified priority areas consisted of recommendations for mechanisms for mobilisation of timely and adequate resources for climate finance and policy measures and financial instruments for catalysing the rapid development and deployment of green and low carbon technologies. The list also included scaling-up the adoption of social impact investment instruments and improving nature-related data and reporting under the G20 analytical framework for sustainable development goal (SDG)-aligned finance and overcoming data-related barriers to climate investments.
Ms. Joshi also pointed out that the Presidency with support from the U.S. and China co-chairs, was able to achieve substantial progress in building a common understanding among G20 members on most of the issues. During the three-day meeting, members intensively discussed the deliverables under the three priority areas which comprised mechanisms for mobilisation of timely and adequate resources for climate finance, finance for the SDGs and capacity building of the ecosystem for financing toward sustainable development.
To promote sustainability-aligned finance and align more finance with social SDGs, members agreed on the need to leverage MDB finance for making more social impact investment projects commercially viable, promote public-private partnerships in social impact initiatives, create facilities or platforms to finance specific projects, especially for SMEs, among others.
Discussions were also held on how improved data and reporting can play a critical role in incorporating nature-related risks and opportunities into core decision-making and processes of businesses and financial actors. They agreed upon the need for promoting greater comparability, interoperability, and consistency of nature-related data and reporting considering country specific circumstances. Climate, nature and biodiversity data platforms should collaborate to help stakeholders incorporate nature and biodiversity data into their frameworks and understand nature-related risks.
The results of the third SFWG meeting will be further discussed at the 3rd G20 Finance and Central Bank Deputies’ meeting and the 3rd G20 Finance Ministers and Central Bank Governors’ Meeting, which will be held in Gandhinagar next month.
The meeting, held from June 19-21, 2023, was attended by around 100 delegates from G20 member countries, 11 invitee countries and 15 International Organisations including OECD, World Bank, Network for Greening the Financial System (NGFS), FSB among others.
