Principles for allocating finance for development and climate goals

The global community has come together on several occasions over the past two decades to set urgent and ambitious goals for development and climate change embodied, inter alia, in the SDGs, and the Paris Agreement. The first goal is to accelerate human and economic development to durably improve outcomes for the ~700m people who still live under the international poverty line. The second is to lessen the burden of climate change that is already baked in from past emissions, particularly those impacts falling disproportionately on the poorest people and on lower income economies. The third is to reduce global emissions of greenhouse gases, in line with the Paris Agreement, and to avoid the worst physical impacts of climate change. This would require significantly and rapidly reducing global greenhouse emissions from today’s levels of ~58 gigatons of carbon dioxide equivalent (across CO2, CH4, N20, and F-gases) today to net zero by 2050. Although meaningful progress has been and is being made on all three imperatives, it has not been fast enough to meet the agreed global goals, in good measure because funding these investment needs has proven challenging. While increasing overall financing will be essential, spending it efficiently and effectively will be necessary if we take the global goals and their timelines seriously. Available funding remains substantially lower than what is needed to achieve the SDGs—the annual SDG funding gap is estimated to have risen from $2.5 trillion in 2014 to $4.2 trillion in 2023 in part because of the setback in development since the pandemic, the food and fuel price shocks, and the intensification of climate shocks. Moreover, public funding is constrained and becoming more so as donor governments face tight fiscal conditions and reduce their aid flows and recipient countries have run through all available fiscal buffers after more than 4 years of back-to-back exogenous shocks.11 At the same time, interest rates have risen making the available market financing more expensive. Finally, the magnitude of policy, regulatory and institutional changes needed for durable progress including in attracting private capital especially in LICs and LMICS has been very slow.

source :

https://docs.gatesfoundation.org/documents/gates_foundation_principles_finance_for_development_and_climate_goals.pdf