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Mapping the finance for Paris: Who’s who and where?


For those who may have joined us recently, we’re republishing the first in our ‘Paris Finance Landscape’ series, a guide to “who’s who”  in NDC finance. If you enjoy this post, consider reading part two and part three for further analysis

While US equivocation about its support for the Paris Agreement is worrying, it should not distract us from the real momentum building all over the world for its speedy and effective implementation.  To this end, given we are half way between COPs 22 and 23, it seems a good moment to take stock of who’s doing what in the giant task of Paris Agreement finance.

We’ll do this in three parts:

  • An overview of the policy and finance actors this week
  • An overview of non-finance actors next week
  • A final analysis of what an ideal landscape might look like

By our reckoning (and it obviously depends on how you define them) there are at least 22 sets of actors –  by which we mean groupings such as DFIs*, think tanks, climate funds and so on –  occupying the scene.  And some of those groupings – for example, corporations and institutional investors – have huge numbers of individual members.

The central organising principle, or focal point of the Paris landscape, is seen to be the UNFCCC, the body responsible for delivering the agreement.  In terms of the “rulebook” and other aspects of the agreement, that is certainly the case.

But is that the right way to consider the landscape from a financing point of view?  Given the “bottom up” nature of Paris, it’s more accurate to say there are as many centre points to the landscape as there are NDCs – 138 at the date of writing.

Countries themselves are ultimately responsible for the implementation of their undertakings under the Paris agreement and this means every nation needs to initiate the funding options they require. In the case of developing countries, they are to be given – at levels which remain hotly contested, as our recent report on the GCF highlighted – access to both funding and technical support to help them meet that responsibility, but the responsibility itself remains with them.

So perhaps our landscape is better captured by a map of the heavens, each star a nation, with a set of planets of various kinds orbiting in differing combinations depending on the size, remoteness and gravitational pull of the nation-star in question.

Here are the possible planets revolving around these nation-stars, as we define them:

Policy and finance actors
  • Governments (national, regional, local and cities)
  • Official bodies such as the UNFCCC, OECD
  • Development finance institutions (both multilateral and bilateral)
  • Green banks
  • Climate Funds
  • International capital markets
  • Domestic capital markets
  • Corporations
  • Rating agencies/opinion providers
  • Insurance
  • Aid agencies
  • Foundations/philanthropy
Non-financial/governmental actors
  • “Conveners” such as CDP, Mission 2020, We Mean Business
  • “Trade” networks such as IETA, IRENA
  • Investor networks such as IIGCC
  • City networks such as C40
  • NDC-specific networks such as NDC Partnership, CDKN
  • Think tanks such as CPI, WRI, IIED
  • Specialist consultancies
  • Advocacy groups such as CarbonTracker, NGOs
  • Media
  • Academia

Given the length of these lists, it’s no wonder countries have a challenging time finding the help they need and who can provide it, especially when institutional capacity is low in terms of familiarity with finance, whether public or private.

We offer over the first two parts of this series our tour d’horizon of these various sets of actors, the relationships between them and where they are in terms of their own capacity to help countries.

Alert One:  This is not, and is not intended to be, an exhaustive survey. We are sketching out the various niches we see, and some of the work underway.  If your organisation is doing great work but we don’t know about it, please contact us

Alert Two:  Dense reading ahead!


While no less than 164 countries have passed national laws on climate change (centrally documented here), what we hear constantly is that institutional capacity and readiness to finance and implement the Paris NDCs varies hugely. Some countries have a lot of groundwork in place, some (including, apparently, the USA), have very little. Some are clear on how implementation will be coordinated, others have yet to work this out.

DFIs such as the IDB recognise this variation and have made provisions where needed for their support to have a significant gap analysis and technical assistance element at the outset. In-country, it is also clear that many issues need to be resolved such as the powers and obligations of regional and local governments, including cities which are pivotal actors but rarely have extensive fundraising powers.

Official Bodies

Among UN bodies, we see the UNFCCC’s secretariat with just a small team devoted to the finance side, essentially seeking to play a dot-joining role between public and private sources of finance.  Its Standing Committee on Finance collects data for a biennial survey on climate finance, but the data on private finance is sketchy. The UN Office for Project Services (UNOPS) has ambitions to become a provider of services to the private sector that will help to de-risk climate projects at scale – and to be a co-investor in such projects – but these plans are still at an early stage. UNDP is also active in climate finance.

While not directly focussed on NDC financing, the UN Environment Programme’s Financial Initiative (UNEPFI) is providing secretariat services for the G20’s work on green finance alongside its ongoing work on reform of the global financial system.  It is also behind the Principles for Sustainable Insurance which is, among other things, exploring how insurers can support adaptation programmes and greater resilience.

Outside the UN, the OECD runs important work on fossil fuel subsidies and carbon pricing.  It has also stepped up to be the holder of the biggest poisoned chalice in climate finance, namely the measurement of developed country contributions to climate finance along the “pathway” to the $100 billion p.a. promised at Copenhagen.

The G20 is taking a keen interest in green finance, especially in green bonds and infrastructure, the latter thought its Green Investment Hub, based in Australia.

The “central bankers’ central bank”, the Bank for International Settlements in Switzerland, has set up the Taskforce on Climate-Related Financial Disclosures, led by Bank of England Governor Mark Carney. This has now published its recommendations on the corporate disclosures on carbon risks it views as necessary for financial markets to understand the consequent investment risks.

Finally – though now independent of the UN – the ‘Principles for Responsible Investment’ (UNPRI) developed by UNEPFI  is increasing institutional investor uptake of ESG* issues and assisting the development of markets such as green bonds.  While adoption of the Principles has to date been mainly in the most developed markets (Europe, North America and Japan), the PRI now has regional offices all over the world and is seeing growth in adoption in all these places.

Development Finance Institutions

Among the development finance institutions (both multilateral and bilateral), those leading the way with specific units and strategies focussed on climate change seem to be the IDB and the ADB.  The IDB, moreover, has a dedicated NDC support programme, NDC Invest, expected to soon see its first projects under way.

The World Bank has developed the NDC Platform, an easy to use database profiling every NDC.  The Bank is already a project funder and its NDC strategy is under development.  It’s private sector arm, the IFC has partnered with Amundi, to launch a $2bn green bond fund for emerging economies and published analysis of Climate Investment opportunities in emerging markets. The IFC’s NDC strategy is still in process.

It is less clear how the bilateral DFIs, such as KfW (Germany), FMO (Holland) and JICA (Japan) are approaching Paris.  They have major programmes in place to support relevant projects, for example clean energy and smart agriculture, but specific strategies to support Paris implementation aren’t apparent.

Meanwhile, the two “new kids on the block”, the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) have both now made their first loans, but the strategies of both, though again clearly relevant in terms of the type of investments they will support, do not appear to be directly tied to Paris in any way.

The key issue for development banks in helping to catalyse Paris finance is the adjustment needed to their current risk appetites.  There is no indication yet that they are addressing this “elephant in the room”.  No less than three think tanks have recently published reports critical of various aspects of DFI performance, and in a report to the G20, the Global Infrastructure Hub has directly challenged the DFIs to improve their performance in ‘crowding in’ private sector capital.

Green Investment Banks

As we discovered in our interview with Douglass Sims of the NRDC, green investment banks have a potentially wide-ranging role to play.  Development of the green bank network is still, however, very much a work in progress, but a conference in Mexico City in late June will be an opportunity to see and hear the latest progress.  Meanwhile, a setback may have occurred for one of the most promising green investment banks, with the disposal of the UK one to the Australian Macquarie Bank.  The acquisition is a test for Macquarie, which has a long history of fossil fuel and high carbon infrastructure investment alongside a growing clean-tech portfolio.  Is the acquisition simply an asset strip, or does it signal a repositioning to be a ‘go to’ bank for Paris?

International Capital Markets

The debt side of international capital markets are waking up to the potential pipeline* embedded in the Paris agreement in the form of green bonds, where issuance reached $93billion in 2016.  One unexpected but interesting possible consequence of the scaling of green bonds, with their improved transparency on the use of proceeds and reporting, is that markets which would not normally be attractive to investors can benefit from these higher accountability standards.  Forthcoming Nigerian issuance is a case in point.

At the same time as green bonds are on the rise, behaviour changes are being forced on banks and asset managers from the global fossil fuel divestment campaign,  and the widespread push by institutional investors for improved environmental, social and governance performance of their investee companies.  These pressures are creating demand for ‘alternative’ investments that are cleaner in all respects, and NDC pipeline could readily satisfy such demand, if other barriers (especially in emerging economies) can be addressed.  DFIs need to be front and centre in this effort, especially to mobilise equity and mezzanine* finance for projects.

Domestic Capital Markets

It is far harder to judge the state of awareness of Paris-related needs and opportunities in domestic capital markets.  This is partly because they are much less reported, but also because their depth and transparency varies massively between markets.

A couple of things are clear, however.  On the upside, the evidence is that where there has been green bond issuance in countries like Mexico, this has been taken up by local investors.  On the downside, it is apparent that generally there is little or no connection or communication between NDC policy makers and financiers, including domestic markets.

COP23 should make this conversation a top priority, encouraging both sides to speak and understand the language of the other.  This guide by Kirsty Hamilton is apposite.  


According to the Climate Policy Initiative’s regular Landscape of Climate Finance survey, corporations are by far the largest funders of climate finance, through their normal business investments in things like energy efficiency improvements.  Engineering, architecture and construction firms are also driving enormous progress in areas such as green buildings and, as we’ll cover in Part 2, other aspects of corporate activity such as supply chains are being steadily ‘greened’.

Corporations are already piling into the green bond market, where there is evidence that the improved transparency of these instruments can lower their cost of capital* for investors who, as we noted above, are on the hunt for cleaner places to put their money.

This is the best possible proof that intelligent policy change by governments can effectively drive behaviour change, and provides optimism that the same can happen to stimulate other types of finance for climate actions.

However, two points are worth noting.  First, the vast majority of this corporate investment is by the largest companies in the most developed economies. The task is therefore to help companies in more challenging markets, and of a smaller size, have access to both bank and bond finance.  Given that SME finance has long been recognised as a “missing middle” – between ‘retail’ finance (for individuals) and ‘wholesale’ finance (for large companies) – this will not be straightforward. But, as impact investing has shown, with the right structures it can be done.

Second, as we reported in our piece on adaptation in Australia, this aspect of climate change remains little understood by companies; a conclusion reinforced by our report on Asia Pacific elsewhere,  which found that opportunities in adaptation (such as the huge amount of coastal defence work) are not yet registering strategically with large corporations in the region.

Rating Agencies and Opinion Providers

Overseeing the capital markets and corporations are rating agencies which provide assessments of credit and other risks.  Long a feature of the sovereign and corporate bond markets in particular, these agencies took a major reputational hit in the 2008 financial crisis, but may now have found a new role in the estimation of climate risk and performance.  As investor demand for clean investments grows, two leading agencies, Standard & Poors and Moody’s, have announced tools to assess the ‘greenness’ of both companies and green bonds.  Investment advisory firms such as Mercer are also helping institutional investors minimise the climate risks in their portfolios.  Alongside the rating agencies and advisers, another mini-industry is growing up around the provision of opinions on the use of proceeds and other aspects of green bonds, led by companies such as Sustainalytics  and Norway’s CICERO.


The insurance industry clearly has a major role to play in the struggle against climate change effects.  As 2016 was confirmed the hottest year on record, global insurer Aon’s annual Climate Catastrophe Report for the year found that “total economic losses [of $210 billion] were 21 percent above the 2000 to 2015 mean (USD174 billion) on an inflation-adjusted basis. Economic losses have annually trended upwards by 4.0 percent [in real terms] since 1980.”  It also noted that floods, perhaps the event most immediately linked in our minds to climate change, were the costliest peril for the 4th consecutive year.

Major insurers have started to coalesce around the UN Principles for Sustainable Insurance mentioned above, and have got together with regulators to form the Sustainable Insurance Forum, launched at the end of 2016.  Meanwhile, micro-insurance products, ranging from crop to health cover, are vital especially for remote and vulnerable populations.

Aid Agencies

Aid agencies are pivotal to Paris finance, given their control of the deepest concessionary finance wallets.   Such funding is vital both in direct financing of otherwise unfinanceable projects – for example in certain areas of adaptation – and in providing the highest loss-bearing layers in structured* finance packages.  We don’t think their potential in the latter role is yet well understood, or this is not yet visible, if it is.

To date, the most prominent actor specifically on NDCs has been the German agency GIZ, which has been behind the IKI initiative and – along with the Dutch, Danish, UK and French agencies – is a supporter of the NDC Partnership, including its NDC Toolbox Navigator.

The French agency AFD is understood to be releasing a new strategy in the second half of this year.  As far as we know, the UK’s DFID has not yet issued any specially NDC-focussed strategy, though by concentrating heavily on health in its general programmes over the past several years, it may well have neatly positioned itself in a highly relevant spot for adaptation finance.  We are aware that other northern European agencies and Japan are also developing their thinking.

Climate Funds

The other concessional finance purse-string-holders are the climate funds, over 20 of them multilateral, with some $30 billion pledged to these to date. As we have been seeing in recent project postings from Jamaica and Fiji on, these are funding infrastructure on the ground and bringing private finance in alongside them.

But access to these funds seems to be something of a lottery in the sense that some countries are good at the ‘process’ while others are not.  The two largest funds, are however, going through uncertain times.  It seems The Adaptation Fund barely survived COP22, and is under discussion again at Bonn as we write, and there are significant teething troubles at the GCF, as we recently reported.

Foundations and philanthropy

Funding from these sources is essential for two aspects of Paris finance.  First, Foundations can fund the thinking that needs to go into how it is to be achieved.  And second, as with the aid agencies, they can fund – either directly or via structured finance – the parts of climate finance that commercial funding cannot reach, especially in adaptation.

The Gates Foundation is a major player in global health funding, for example via the GAVI programme for vaccination.  Foundations like Habitat for Humanity are breaking ground in funding for affordable housing, while The Nature Conservancy has created innovative structures that use its AAA credit rating to lower the costs of capital* for work in coastal adaptation

While foundations and philanthropists are often among the most risk-ready and imaginative funders, they can also be inflexible and risk averse.  The extent to which major players are aligning and harmonising their climate missions with Paris is still not clear.  One example of an approach specifically focussed on Paris is the Finance Dialogue, supported by a number of large foundations and aiming to co-ordinate funding activities.

Look out for Part 2 next week, when we take our survey of Paris actors to the non-financial players

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