Since the Swedish scientist, Svante August Arrhenius established the contribution of carbon dioxide to global warming in 1896, the scientific consensus is that greenhouse gas emission from human activities is responsible for climate change.
Today, climate change is arguably the greatest challenge facing humanity, as the International Panel on Climate Change (IPCC) basically the gold standard for climate science warned of several regional changes in climate with global warming of up to 1.5C (equivalent to 2.7F) compared to the pre-industrial levels.
In September 2016, the atmospheric carbon concentration crossed the symbolic redline of400 parts per million (ppm) ofCo2,and the forecast for 2020 isfor it to remain above 410 ppm for the entire year.
According to World Meteorological Organization (WMO), global temperatures have risen in parallel to the atmospheric carbon concentration.
The last decadewas thehottestever recorded on the planet.The record-setting 2016 at 0.56Cabove the 1981-2010 baseline rangewas the hottest year since record started in 1880, while 2019 was just behind by 0.04C.
Our planet is not only warming,fingerprints of anthropogenic climate change is increasingly seen in diverse arrays of meteorological and hydrological phenomena around the world, from heat waves to coastal damages during extreme tides and storms, flooding from more intense precipitation events, and severe drought.
It is also manifesting inchanges to growing seasons, shrinking great ice sheets on Greenland and Antarctica, retreating mountain glaciers, water resources, ocean acidification, and coastal flooding.
The IPCC has warned that the increasing magnitudes of warming exacerbate the likelihood of severe, pervasive, and irreversible impacts.
Climate change is an exemplary illustration of inequality in the 21stcentury. Future climate will depend on committed warming caused by past anthropogenic emissions, as well as future anthropogenic emissions and natural climate variability.
The bulk of the temperature increase is due to historical emissions of developed countries that have attained their current levels of development through carbon-intensive growth since the pre-industrial period.
The Least Developed Countries (LDCs), even though they have contributed relatively little to the current stock of emissions causing the problem, are facing the sharp end of climate change.
They are highly vulnerable to extreme weather events and these are anticipated to increase in frequency and intensity with climate change.
Hence, while efforts to mitigate climate change are crucial, it is also essential to assist developing countries to adapt to the impacts of climate change already being experienced due to the past and current greenhouse gas emissions.
Africa is home to more LDCs than any other continent and is where most of the adaptation work in this decade will be done. The continenthascontributedlittle toclimate change(just 3.8%)but is disproportionately vulnerable to its impacts which are compromising the continents development and threatens millions of Africans and their livelihoods.
The continent ishighly vulnerable to the adverse effects ofclimate change due to the interaction of multiple stresses occurring at various levels,dependence on climate-sensitive sectorsand low adaptive capacity.
Thisvulnerability is exacerbated by existing developmental challenges such as endemic poverty; poor governance and weak institutions; lack of awareness and access to knowledge; high dependence on natural resources and rain-fed agriculture; limited access to capital, including markets, infrastructure and technology; recurrent droughts; ecosystem degradation; and associated complex disasters and conflicts.
Finance is a major challenge to climate action in Africa as in most LDCs. Publicclimate finance is largely inadequate, inefficient and ineffectivedue to poor revenue generation, rising public debt and onerous debt servicing.
The aggregate costs of adaptation in Africa, home of about two-thirds of LDCs and arguably the most vulnerable region in the world to the impacts of climate change, were estimated by the African Development Bank in 2010 to be more than USD600 billion over the next 10-20 years.
Climate finance has been a perennial sticking point at international climate meetings. The evolving concept of additionality of climate finance is also a highly political and hotly contested issue in climate change negotiations.
The developing countries contend that developed countries should not merely redirect resources previously earmarked for other environmental and development areas including official development assistance to climate change, but that developed countries should provide new and additional financial resources,as stated in theArticle 4 of the UN Framework Convention on Climate Change (UNFCCC),towards mitigation and adaptation in developing countries as part of a larger finance and sustainable development agenda
In recognition of the importance of public finance, the global community has established several climate funds. These multilateral climate funds are designed to disburse funding to developing countries to help meet the cost of climate change mitigation and adaptation.
Capitalized primarily by developed countries, the funds also serve as recognition of the greater historic responsibility these countries have for current atmospheric greenhouse gases. However, these funds have failed to meet up with global expectations.
Several developed countries have failed to meet their commitments, with the gap between what is needed and what is available growing deeper with each passing year.
Furthermore, there is challenge ofaccountability and transparency and failure tobalance funding between adaptation and mitigation, as well as geographically.
Greenhouse gas emission, which causes planetary climate change, qualifies as the biggest negative environmental externalityaffecting all sectors of the economy and threateningfinancial stability and longer-term prosperity, underscoring the need for private fund and institutional capital to finance climate action.
Climate change does not just represent risks, but also opportunities for investment. The International Finance Corporation (IFC) has called for a significant private sector investment of about $23 trillion worth of potential investments by 2030 in 21 big emerging markets, which is estimated to yield about $7.1trillion in economic benefits.
These opportunities includethe development of new technologies, improvement of infrastructures, reforestation, as well as products and services that can mitigate or help people adapt to the effects of climate change.
Every investment contributes to short and long-term positive and negative social and environmental effects. Investors shape these effects through investment decisions.
Impact investing has emerged as an innovative approach to mobilizing both public and private capitalto solve the worlds seemingly intractable social and environment problems.
The common theme across impact investing is theaim to achieve measurablesocial and/or environmentalgoals in addition toachievingfinancial returns.
The current and potential sizes of the impact investing sector are debatable. Widely cited numbers range from estimated value of $502 billion by the Global Impact Investing Network (GIIN), to as high as $1.3 trillion in assets of signatories linked to sectors related to specific and environmental goals identified by United Nations Principles for Responsible Investing.
Impact investors appetite was estimated as high as $26 trillion by the International Finance Corporation (IFC).
Over half of all respondents to the GIIN Annual Impact Investor Survey 2019 considered contribution to a global agenda, such as the Paris Climate Accord or the United Nations Sustainable Development Goals, a very important motivator for making impact investments.
Furthermore, impact funds have a higher proportion of their portfolios in regions outside of Europe and North America, or in emerging regions.
This suggests that impact investors have a special willingness to invest in locations that traditional investors may avoid, and regions where investment needed for climate action is the greatest.
For Africa to keep benefiting from the increasing impact investments,policy makers in Africa must provide the favorable institutional arrangements to attract impact investing to their countries and jurisdictions.
Public policydiscussions and decisions around legal andregulatory frameworks, fiscal incentives,innovation system, education, training and skills, technology transfer and acquisition, and infrastructural development should be centered on attracting investments in areas related to climate adaptation and mitigation.
In conclusion, the climate change scientific debate is over and the impact investors appetite is huge; poor policy and weak governance structures must not stand in the way of attracting the much-needed climate finance. This decade is crucial for Africa, we must start now.
- Oguntuase is of the Centre for Environmental Studies and Sustainable Development,
Lagos State University.