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Financing Climate Futures

Rethinking Infrastructure

image of Financing Climate Futures

Infrastructure worldwide has suffered from chronic under-investment for decades and currently makes up more than 60% of greenhouse gas emissions. A deep transformation of existing infrastructure systems is needed for both climate and development, one that includes systemic conceptual and behavioural changes in the ways in which we manage and govern our societies and economies. This report is a joint effort by the OECD, UN Environment and the World Bank Group, supported by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. It focuses on how governments can move beyond the current incremental approach to climate action and more effectively align financial flows with climate and development priorities. The report explores six key transformative areas that will be critical to align financial flows with low-emission and resilient societies (planning, innovation, public budgeting, financial systems, development finance, and cities) and looks at how rapid socio-economic and technological developments, such as digitalisation, can open new pathways to low-emission, resilient futures.

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Rethink development finance for climate

Development banks and development finance institutions are major financiers of infrastructure and could play a stronger role in supporting developing countries transition to low-emission, resilient development. This chapter presents an overview of why development banks play a critical role, with a special focus on national development banks (NDBs). It discusses progress to date, as well as barriers and potential opportunities of scaling up climate finance. Three key actions are proposed for governments and the banks themselves: strengthen mandates and incentives, mobilise new investors and sources of finance to create new climate markets, and use concessional finance strategically.

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