Financing on Climate - Resident Coordinator's Speech at COP29 Side Event, Gita Sabharwal

Your Excellencies, it is a pleasure to join my fellow RCs as we set out ways in which UN Country Teams are accelerating climate action for net-zero transition closely aligned to national priorities. 

I will speak from the perspective of UN Indonesia where in partnership with the government, the Country Team prioritizes four key areas: just energy transition, deep decarbonization, sustainable agriculture, and the scaling up ESG investments.

For these interlocking priorities, the UN brings cutting-edge technical assistance, best available green technologies and convenes financial institutions to bridge the $522B NDC financing need. 

Through a whole-of-UN approach our partnership with the government contributes to reducing emissions by 7% (87.46mtons). 

Specifically, the UN supports scaling up renewables by investing in smart grids and leveraging the last-mile approach for remote islands through solar and mini hydro plants for electricity to over 130,000 households. 

Similarly, our partnership with five industrial parks and over 3,000 factories targets introducing clean technologies such as electric arc furnaces and enhanced oil recovery. 

At the same time, we are scaling up sustainable forest management covering over 700,000 hectares (2.45%) which generates results-based carbon credits.

For the UN to generate transformative impact we need pooled funding instruments like the Joint SDG Fund to catalyse  flexible public and private financing. 

Let me speak to 4 scalable climate financing models to achieve the NDCs enabled by the Joint SDG Fund. 

First, together with the Ministry of Finance, UN has supported the issuance of blue sovereign bonds unlocking $459 million from domestic and international markets. 

The proceeds enable government to scale up financing for sustainable fisheries and aquaculture, and mangrove rehabilitation . 

The UN also works with the Ministry to build capacities for provincial officials to issue municipal bonds predicated on robust financial assessments with the potential to unlock additional $2 billion for accelerating social and climate financing.

More recently, corporates have sought UN support for the development of thematic bonds to mobilize financing for affordable green housing and energy.  

Led by UNDP, UN’s technical assistance supports the development of the bond framework and impact reporting to track progress against set targets. 

Second, the UN partners with national banks, which have adopted the Principles for Responsible Banking to develop sustainable financing plans and scale up ESG investments.

Every percentage point increase in ESG investments by these banks translates into unlocking $1.23 billion for green growth.

One of these banks is scaling up lending for affordable green housing - a national priority to bridge the housing gap.   

Third, the UN with support from Sustainable Energy for All is leveraging its convening power in partnership with government to enable international financial institutions to meet their ESG investment ambitions. 

This will take the form of financing bankable renewable energy projects catalyzing progress towards the government’s net-zero target by 2030. 

Fourth, together with the Ministry of Finance, the UN has supported the development of green sukuks, a form of Islamic financing, mobilizing $8.4 billion over the past six years and contributing to emission reductions for sustainable urban transportation.

The UN is also keen to engage with Zakat and Waqf funds with an asset base of $27 billion to expand their financing to support climate action more comprehensively. 

While these 4 models are applicable to Indonesia, not all of them translate to other country contexts.

They are better suited for UMIC with fiscal space, a deep private sector and robust capital markets.

They also require a mature pipeline of bankable green projects to meet the investment ambition of the domestic and international private sector. 

However, some limitations can be overcome by deepening engagement with young people as they are increasingly championing climate.

Their demand for ESG products, however small individually, will add up together, and can make a difference in the longer term. 

Similarly, climate financing needs to go hand in hand with transfer of technology and development of the manufacturing ecosystem for sustainability.

Looking ahead, pooled funding mechanisms like the Joint SDG Fund remain critical. RCs are key to this process by enabling UNCTs to innovate, derisk, and develop integrated solutions, in partnership with government, to accelerate climate action and turbocharge SDGs.