Greening the development cooperation

The heatwaves across Europe this summer are breaking records; Germany, Poland and the Czech Republic have already recorded their highest-ever temperatures for June. Scientists say climate change increases the likelihood of such a phenomenon.

While some in Europe braced themselves for hotter summers, emerging donors in Europe came together to discuss solutions1. One such solution is green finance; investments that contribute towards sustainable development while helping to reduce risks associated with climate change, and preserving environmental goods and services.

The multiple facets of green finance ensure that there are plenty of interesting insights to be shared and learned from. First, green finance is much more than just climate finance, as the examples of the Biodiversity Finance Initiative have clearly illustrated. Even when it comes to climate finance, it is much more than just investments for renewable energy, as we learned from the Climate Public Expenditure and Institutional Review and other tools. It’s even more than green bonds, with which countries like Poland and Slovenia are already leading the way in the region. Also, in the context of development cooperation, green bonds received a great deal of attention although we learned from the climate finance pioneer, the European Investment Bank, that it is only one of many possible financing instruments. Finally, discussions about green finance in development cooperation would not be complete without the OECD Development Assistance Committee (DAC)’s work with Rio markers and more.

Emerging donors make the best use of their available resources by utilizing their niche expertise area, focusing on the needs of their partner countries. The Ministry of Finance of the Slovak Republic for instance has been providing support to Moldova, Ukraine, Serbia and Northern Macedonia with public finance management reforms. It has also been supporting UNDP’s Alternative Finance Lab, enabling exciting initiatives, from crowdfunding to forecast-based financing. Considering the rich diversity of financing solutions for sustainable development that are both applicable in the context of development cooperation and as domestic policy options, UNDP and its emerging donor partners are sure to revisit this topic again.

1 From May 21-22, more than 60 representatives from the emerging donor countries of Central and Eastern Europe, as well as their partner countries, came together in Bratislava, the Slovak Republic, to learn about green finance solutions for development cooperation as part of UNDP’s ODA Capacity Development Series.