The world needs to adapt faster to climate change – and financial instruments supporting adaptation must improve significantly.
A new United Nations report says investing US$1.8 trillion in climate adaptation would save $7.1 trillion in the social and environmental consequences of not doing so.
Inger Andersen, Executive Director of UNEP said, “We need a global commitment to put half of all climate finance towards adaptation in the next year.
“This will enable early warning systems, resilient water resources and nature-based solutions – a huge step.”
The UN Environment Programme’s new Adaptation Gap Report says 2020 has been one of the warmest years on record.
Over 50 million people have been directly affected by floods, droughts, or storms. Wildfires raged with greater intensity in Australia, Brazil, Russia and the USA, among other countries. It is more important than ever that countries make progress on adaptation.
What’s urgently needed is investment in early warning systems, improved dryland agriculture, global mangrove protection and resilient water resources.
Since 2006, 400 adaptation projects have been financed by multilateral funds. Earlier projects rarely exceeded $10 million. However, since 2017, 21 new projects have had a value of more than $25 million.
Despite this, there remains limited evidence of climate risk reduction. Providers of development finance are not integrating adaptation well enough across their activities.
“Sustainability investment criteria, climate-related disclosure and mainstreaming climate risks in investment decisions are needed”
The report says that current climate risks and the risks of shifting to a climate-resilient economy are already impacting financial stability, affecting company returns and asset values.
It says new tools are needed, such as sustainability investment criteria, climate-related disclosure principles and mainstreaming climate risks into investment decisions.
Nature-based solutions are vital for helping adapt to climate change – and more investment in these is needed. Nature-based Solutions (NbS) work with nature to improve it.
Across the four major climate and development funds, nature-based solutions have risen over the last two decades, but not enough.
These include the biggest dedicated multilateral climate fund, the Green Climate Fund which has allocated 40 per cent of its total portfolio to adaptation and is increasingly using its clout to attract private investors.
Investment in climate change mitigation projects across the four funds is $94 billion. But only $12 billion of this was spent on nature-based solutions.
Having said that, climate adaptation has now been integrated into climate policy across the world. 72% of countries have at least one national adaptation planning instrument, while a further 9% are in the process of developing one.