Banking Archive

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The Great Investment Turnaround: how to finance a sustainable world economy

Berlin, 07/20/2016 – Banks and insurers can play a crucial part in stabilizing the climate, while at the same time safeguarding their clients’ assets. Leading representatives of finance and climate research will discuss the best strategies for a turnaround in investing this Thursday in Berlin. The event is hosted by the Swiss global bank UBS, the French multinational insurance firm AXA, CDP, the European innovation initiative Climate-KIC, Humboldt-Universität zu Berlin and the Potsdam Institute for Climate Impact Research (PIK). Divestment – the diversion of capital from fossil fuel industries to green innovation and sustainable businesses – is a new approach to reducing greenhouse-gas emissions, which could turn out to be a global “game changer”. The Great Investment Turnaround: how to finance a sustainable world economy Already today, investments of billions of Euros are being redirected. Pioneered by students of wealthy US universities, divestment has reached financial big shots like Allianz […]

Berlin, 07/20/2016 – Banks and insurers can play a crucial part in stabilizing the climate, while at the same time safeguarding their clients’ assets. Leading representatives of finance and climate research will discuss the best strategies for a turnaround in investing this Thursday in Berlin. The event is hosted by the Swiss global bank UBS, the French multinational insurance firm AXA, CDP, the European innovation initiative Climate-KIC, Humboldt-Universität zu Berlin and the Potsdam Institute for Climate Impact Research (PIK). Divestment – the diversion of capital from fossil fuel industries to green innovation and sustainable businesses – is a new approach to reducing greenhouse-gas emissions, which could turn out to be a global “game changer”.

The Great Investment Turnaround: how to finance a sustainable world economy

Already today, investments of billions of Euros are being redirected. Pioneered by students of wealthy US universities, divestment has reached financial big shots like Allianz by now: the financial services company announced its intention to divest from its assets in coal mining. The foundation of the legendary US oil dynasty Rockefeller plans to divest their funds from the fossil fuel industry as well.

“The risks of climate change affect everyone and everything. When the finance sector now divests billions from the fossil business, this does not only reflect a moral responsibility but also makes good business sense,” says PIK director Hans Joachim Schellnhuber, co-initiator of the conference. “While weather extremes increase already, many of the biggest climate impacts, like the consequences of sea-level rise, will become perceptible only after it would be too late to act. Therefore it is important for the finance sector to recognize the warnings of science and to ramp up sustainable investments as soon as possible. The Paris Agreement substantiates that the nations of the world aim at reaching zero emissions by 2050. This means we are now in year one of the Great Transformation. Whoever still invests in coal and oil will not only damage the environment, but eventually also lose a lot of money.”

“Recognize the possible economic and social impacts of climate change”

„As a global bank it is of major importance to recognize the possible economic and social impacts of climate change, in order to better prepare us and our clients,” says Axel Weber, Chairman of the Board of Directors of UBS Group AG. “The financial sector is working hard to lay the foundations for filling gaps in financing climate action and to support nations in delivering on their corresponding commitments. We aim for a sensible long-term allocation of capital that is congruent with a low-carbon economy.”

Christian Thimann, Global Head of Strategy, Sustainability, and Public Affairs at AXA Group and Vice-Chair of the FSB Task Force on Climate-related Financial Disclosure, says: “Finance has an important role in addressing climate change, because it steers long-term investment. Investors need to understand how companies address climate change in their strategies, which goes well beyond the current carbon footprint. Under the mandate of the G20 and the Financial Stability Board, the Task Force on Climate-related Financial Disclosure seeks to develop consistent voluntary disclosures by companies and enhance investor understanding of climate-related business risks and opportunities. Such disclosures and better investor understanding will foster implementation of the COP21 agreement.”

„Divestment is one of the most potent signals of investor discontent”

Susan Dreyer, CDP Country Director Germany, Austria, Switzerland adds: „Divestment is one of the most potent signals of investor discontent and can be a valuable method to manage portfolio risk, given climate risks are becoming more urgent every day. Having built a platform for transparent and comparable climate strategies, into which 5600 companies worldwide are voluntary reporting today, CDP knows of the impact investor engagement can unfold. Shareholder resolutions or setting joint reduction targets are good examples. And yet, the clear signal from both civil society and investors that fossil based business models do not have a future in the decarbonized world of 2050, is helpful and needed.”

Among the distinguished speakers are also Rainer Baake, State Secretary at the Federal Ministry for Economic Affairs and Energy, Laurence Tubiana, French Ambassador for international climate negotiations at COP 21, Monsignor Marcelo Sánchez Sorondo, Chancellor of the Pontifical Academy of Sciences, and high-ranking finance representatives, from the major bank HSBC to Union Investment, from the central bank of the Netherlands to the French Ministry of Finance.

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How to Finance a Sustainable World Economy

Berlin, 07/20/2016 – Banks and insurers can play a crucial part in stabilizing the climate, while at the same time safeguarding their clients’ assets. Leading representatives of finance and climate research will discuss the best strategies for a turnaround in investing this Thursday in Berlin. The event is hosted by the Swiss global bank UBS, the French multinational insurance firm AXA, CDP, the European innovation initiative Climate-KIC, Humboldt-Universität zu Berlin and the Potsdam Institute for Climate Impact Research (PIK). Divestment – the diversion of capital from fossil fuel industries to green innovation and sustainable businesses – is a new approach to reducing greenhouse-gas emissions, which could turn out to be a global “game changer”.

The Great Investment Turnaround: how to finance a sustainable world economy

Already today, investments of billions of Euros are being redirected. Pioneered by students of wealthy US universities, divestment has reached financial big shots like Allianz by now: the financial services company announced its intention to divest from its assets in coal mining. The foundation of the legendary US oil dynasty Rockefeller plans to divest their funds from the fossil fuel industry as well.

“The risks of climate change affect everyone and everything. When the finance sector now divests billions from the fossil business, this does not only reflect a moral responsibility but also makes good business sense,” says PIK director Hans Joachim Schellnhuber, co-initiator of the conference. “While weather extremes increase already, many of the biggest climate impacts, like the consequences of sea-level rise, will become perceptible only after it would be too late to act. Therefore it is important for the finance sector to recognize the warnings of science and to ramp up sustainable investments as soon as possible. The Paris Agreement substantiates that the nations of the world aim at reaching zero emissions by 2050. This means we are now in year one of the Great Transformation. Whoever still invests in coal and oil will not only damage the environment, but eventually also lose a lot of money.”

“Recognize the possible economic and social impacts of climate change”

„As a global bank it is of major importance to recognize the possible economic and social impacts of climate change, in order to better prepare us and our clients,” says Axel Weber, Chairman of the Board of Directors of UBS Group AG. “The financial sector is working hard to lay the foundations for filling gaps in financing climate action and to support nations in delivering on their corresponding commitments. We aim for a sensible long-term allocation of capital that is congruent with a low-carbon economy.”

Christian Thimann, Global Head of Strategy, Sustainability, and Public Affairs at AXA Group and Vice-Chair of the FSB Task Force on Climate-related Financial Disclosure, says: “Finance has an important role in addressing climate change, because it steers long-term investment. Investors need to understand how companies address climate change in their strategies, which goes well beyond the current carbon footprint. Under the mandate of the G20 and the Financial Stability Board, the Task Force on Climate-related Financial Disclosure seeks to develop consistent voluntary disclosures by companies and enhance investor understanding of climate-related business risks and opportunities. Such disclosures and better investor understanding will foster implementation of the COP21 agreement.”

„Divestment is one of the most potent signals of investor discontent”

Susan Dreyer, CDP Country Director Germany, Austria, Switzerland adds: „Divestment is one of the most potent signals of investor discontent and can be a valuable method to manage portfolio risk, given climate risks are becoming more urgent every day. Having built a platform for transparent and comparable climate strategies, into which 5600 companies worldwide are voluntary reporting today, CDP knows of the impact investor engagement can unfold. Shareholder resolutions or setting joint reduction targets are good examples. And yet, the clear signal from both civil society and investors that fossil based business models do not have a future in the decarbonized world of 2050, is helpful and needed.”

Among the distinguished speakers are also Rainer Baake, State Secretary at the Federal Ministry for Economic Affairs and Energy, Laurence Tubiana, French Ambassador for international climate negotiations at COP 21, Monsignor Marcelo Sánchez Sorondo, Chancellor of the Pontifical Academy of Sciences, and high-ranking finance representatives, from the major bank HSBC to Union Investment, from the central bank of the Netherlands to the French Ministry of Finance.

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The development effectiveness of Development Finance Institutions

Development funding is increasingly being channelled through Development Finance Institutions. These national institutions are particularly solicited when using development aid money to free up further investment, known as leveraging. When used well, these tools have the potential to allow sectors of developing countries’ economies that wouldn’t otherwise attract investment to strengthen and expand. However, this joint TUDCN-CPDE research paper highlights a number of alarming shortfalls in how these institutions operate that can seriously undermine international development goals.

This new report, entitled ‘The development effectiveness of supporting the private sector with ODA funds’ examined nine Development Finance Institutions (DFIs). It is jointly produced by the CSO Partnership for Development Effectiveness (CPDE) and the TUDCN. Five case studies (available below) provided a background for the study which found that DFI practice is lacking in three vital areas:

Ownership

Ownership has been repeatedly highlighted as a fundamental pillar of development. In spite of that, the majority of the DFIs examined had policies that expressed a preference for supporting the interests of the donor country. This is in clear contradiction of the aim of promoting local ownership and that of ensuring that aid by untied from external interests. In the case of COFIDES (Spain) and OPIC (USA) they go as far as requiring that any investment they make benefit their national (donor) companies. It is perhaps no coincidence that these are the only two DFIs examined in the study that are part owned by private national stakeholders. The issue of private ownership needs to be addressed as it creates a bias that can evidently lead to the compromising of development interests. The concept of ownership also extends to setting the aims of projects. However, not one of the DFIs require that either developing country governments or local social partners be consulted in setting out the aims of a project.

Development results

In order to obtain a good and independent idea of what the development impacts are on the ground, there is a need for performance standards and monitoring systems to be accessible. However, reporting standards are insufficient across the board. There is currently too strong a reliance on self-reporting and limited use of monitoring indicators. Key documentation required for ensuring accountability is not made available. Furthermore, as highlighted by the Panama Papers, it is widely recognised that offshore financial centres (OFCs) have a negative impact on developing countries. It is astounding then that 75% of CDC’s (UK) investments went through jurisdictions that are among the 20 most secretive. This poses serious challenges to the transparency of the DFIs’ work.

Mutual accountability

Meanwhile, accountability flows in only one direction. There is a need for stakeholders to have access to essential information and for complaint procedures to be systematically put in place in order for the opinions of the beneficiaries to be heard. The ability of workers to get organised and raise a complaint to the relevant body is also questioned. This reflects a broader approach of DFIs to labour standards as distinct from development goals. This outlook is symptomatic of a general contempt for labour interests among DFIs which is otherwise illustrated by the fact that none of them require the board to include a workers’ representative.

In light of these findings, the current performance of DFIs is unsatisfactory. Examples of best practice can lead the way to a sustainable approach to the use of financial tools for development.

The full report is available here: EN FR ES

The full case studies are available here:

Source: ITUC http://www.ituc-csi.org/DFI-study

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Trade finance and SMEs – Bridging the gaps in provision

The World Trade Organisation (WTO) has released a new study focusing on SMEs’ lack of access to trade finance, providing a list of recommendations to address the gap.

WTO Director-General Roberto Azevêdo has issued a call for action to help close the gaps in the availability of trade finance that affect the trade prospects of small and medium-sized enterprises (SMEs), particularly in Africa and Asia. In a new WTO publication, “Trade Finance and SMEs: bridging the gaps in provision”, which examines the problem and looks into possible solutions, DG Azevêdo says that easing the supply of credit could have a big impact in helping small businesses grow and in supporting the development of the poorest countries.

WOT Report May 2016

The WTO’s strategy focuses on three fronts: firstly, encouraging global financial institutions to stay engaged, ensuring that regulations are not prohibitive; then, enhancing local financial institutions’ capacity to supply trade finance to SMEs; finally, supporting multilateral development banks’ programmes increasing the availability of trade finance.

A six-point recommendation list tackles additional issues, from enhancing existing multilateral banks’ trade finance facilitation programmes, to closing the trade finance knowledge gap, strengthening training programmes, as well as maintaining a closer dialogue with regulators and improving monitoring of trade finance provisions. The report also suggests that setting specific targets could help in mobilising and co-ordinating efforts to improve SMEs’ access to trade finance. Source: smefinanceforum.org

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Better tax systems crucial for development | ADDIS TAX INITIATIVE starts

Mobilising the revenues needed to further development and improve people’s lives will depend on broader tax bases, stronger tax institutions, and redoubled efforts to stem both cross-border and domestic tax evasion and avoidance. In many countries billions of dollars are lost every year to narrow tax bases, weak administrative capacity, and poor tax compliance. Helping countries to strengthen their tax systems and achieve the Sustainable Development Goals (SDGs) requires a new framework for action. In launching the Addis Tax Initiative, over 30 countries and international organisations have now teamed up to strengthen international cooperation in this area. The Initiative highlights the crucial importance of domestic revenue for financing development and specifically stresses the importance of tackling domestic and cross-border tax evasion and avoidance. Harnessing the momentum of the Financing for Development agenda, the Addis Tax Initiative brings new energy and enthusiasm to the field of domestic resource mobilisation (DRM), emphasizing […]

Mobilising the revenues needed to further development and improve people’s lives will depend on broader tax bases, stronger tax institutions, and redoubled efforts to stem both cross-border and domestic tax evasion and avoidance. In many countries billions of dollars are lost every year to narrow tax bases, weak administrative capacity, and poor tax compliance. Helping countries to strengthen their tax systems and achieve the Sustainable Development Goals (SDGs) requires a new framework for action.

In launching the Addis Tax Initiative, over 30 countries and international organisations have now teamed up to strengthen international cooperation in this area. The Initiative highlights the crucial importance of domestic revenue for financing development and specifically stresses the importance of tackling domestic and cross-border tax evasion and avoidance.

Harnessing the momentum of the Financing for Development agenda, the Addis Tax Initiative brings new energy and enthusiasm to the field of domestic resource mobilisation (DRM), emphasizing the importance of building sustainable DRM capacity through increased technical cooperation, strong domestic governance and institutions, and the political will to drive forward tax system reforms.

In the spirit of the Addis Ababa Action Agenda, the countries subscribing to the Addis Tax Initiative declare their commitment to enhance the mobilisation and effective use of domestic resources and to improve the fairness, transparency, efficiency and effectiveness of their tax systems. Concretely, participants commit to step up efforts as specified below:

  • Participating providers of international support will collectively double their technical cooperation in the area of domestic revenue mobilisation and taxation by 2020;
  • Partner countries restate their commitment to step up domestic resource mobilisation as a key means of implementation for attaining the SDGs and inclusive development; and
  • All countries restate their commitment to ensure Policy Coherence for Development.

In addition to broad-based capacity building, participating providers of international support stand ready to expand cooperation in the following areas:

  • Enabling partner countries take advantage of the progress made on the international tax agenda, such as the OECD/G20 Base Erosion and Profit Shifting (BEPS) project and the Global Forum on Tax Transparency and Exchange of Information for Tax Purposes;.
  • Integrating partner countries into the global tax debate; and
  • Improving taxation and management of revenue from natural resources.

In addition to routine OECD-DAC reporting, the International Tax Compact (ITC) will play a coordinating role to monitor and report on the increased support facilitated by this Initiative.

An ITC/OECD discussion paper released last week, ‘Examples of Successful DRM Reforms and the Role of International Co-operation’, illustrates country cases where substantial improvements in both DRM capacity and revenues were facilitated by international support. These include an additional US$55 million collected in Kenya due to better transfer pricing and a ten-fold increase in tax revenue in Colombia.

The following countries have joined the Addis Tax Initiative: Australia, Belgium, Cameroon, Denmark, Ethiopia, European Commission, Finland, France, Italy, Germany, Indonesia, Korea, Liberia, Luxembourg, Malawi, Netherlands, Norway, Philippines, Sierra Leone, Senegal, Slovenia, Sweden, Switzerland, United Kingdom, and the United States.

In addition, the following international organisations have expressed their support for the Addis Tax Initiative: African Tax Administration Forum (ATAF), Inter-American Centre of Tax Administrations (CIAT), IMF, OECD, World Bank and the Gates Foundation. Source: German BMZ.

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Productive work for youth: Inclusive solutions for youth employment

Follow this European Development Days 2013 session at http://eudevdays.eu/topics/productive-work-youth

Youth represent 17 % of the world’s population and over 40 % of its unemployed, leaving millions economically and socially excluded, which exerts a high cost on society. At the same time, many young people work in informal jobs with a low quality of employment: low earnings, high levels of insecurity, limited chances for advancement, and a lack of social protection. Creating 90 % of the world’s jobs, the private sector is a driving force for poverty reduction. However, young jobseekers, especially marginalised young people, such as care leavers, often do not match the skills required by the private sector and young aspiring entrepreneurs face obstacles in starting or expanding their productive activities.

Interventions to enhance productive work for youth needs to focus on improving the education and employability opportunities for all young people, in close cooperation with the private sector. A cross-sectorial approach, between private sector enterprise and CSOs, to address the education and employment needs of care leavers, and other disadvantaged young people, plays a critical part in ending intergenerational poverty and social exclusion, while ensuring good transitions to adulthood. Furthermore, it is crucial to support the creation and growth of (youth-led) MSMEs, especially in employment-intensive sectors, to increase the private sector’s capacity to absorb employees. In order to address the problems of informal employment and the rising numbers of working poor, the enhancement of job quality should be at the core of all interventions, promoting decent jobs.

In this session UNIDO and SOS–CVI are joining forces to discuss these pressing challenges and combine their vast expertise with key contributions from Deutsche Post DHL, the European Youth Forum and JADE, to identify and share innovative solutions. Follow this European Development Days 2013 session at http://eudevdays.eu/topics/productive-work-youth

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Risk management can be a powerful instrument for development | World Development Report 2014

The latest World Development Report (WDR), Risk and Opportunity: Managing Risk for Development, analyzes risk at many levels and forms and is rich with examples, ranging from job loss and disease to financial crises and natural disasters—often highlighting the costly consequences of mismanaged risk. The 147 banking crises that have struck 116 countries in the past 40 years, for instance, have led to large declines in output and employment.

WDR2014

A key message from the WDR 2014 is that risk management can be a powerful tool for development and has the potential to bring about security and future prosperity to people in the developing world. Effective risk management approaches can not only protect the poor – they can also unlock opportunities for better development outcomes. For example, farmers in Ghana and India – among other countries – who have rainfall insurance have increased their investments in fertilizer, seeds, and other inputs. More: http://go.worldbank.org/OSAT4FHFP0 | Download English Report

Abstract

The past 25 years have witnessed unprecedented changes around the world—many of them for the better. Across the continents, many countries have embarked on a path of international integration, economic reform, technological modernization, and democratic participation. As a result, economies that had been stagnant for decades are growing, people whose families had suffered deprivation for generations are escaping poverty, and hundreds of millions are enjoying the benefits of improved living standards and scientific and cultural sharing across nations. As the world changes, a host of opportunities arise constantly.

With them, however, appear old and new risks, from the possibility of job loss and disease to the potential for social unrest and environmental damage. If ignored, these risks can turn into crises that reverse hard-won gains and endanger the social and economic reforms that produced these gains.

The World Development Report 2014 (WDR 2014), Risk and Opportunity: Managing Risk for Development, contends that the solution is not to reject change in order to avoid risk but to prepare for the opportunities and risks that change entails. Managing risks responsibly and effectively has the potential to bring about security and a means of progress for people in developing countries and beyond. Although individuals’ own efforts, initiative, and responsibility are essential for managing risk, their success will be limited without a supportive social environment—especially when risks are large or systemic in nature.

The WDR 2014 argues that people can successfully confront risks that are beyond their means by sharing their risk management with others. This can be done through naturally occurring social and economic systems that enable people to overcome the obstacles that individuals and groups face, including lack of resources and information, cognitive and behavioral failures, missing markets and public goods, and social externalities and exclusion. These systems—from the household and the community to the state and the international community—have the potential to support people’s risk management in different yet complementary ways.

The Report focuses on some of the most pressing questions policy makers are asking. What role should the state take in helping people manage risks? When should this role consist of direct interventions, and when should it consist of providing an enabling environment? How can governments improve their own risk management, and what happens when they fail or lack capacity, as in many fragile and conflict-affected states? Through what mechanisms can risk management be mainstreamed into the development agenda? And how can collective action failures to manage systemic risks be addressed, especially those with irreversible consequences? The WDR 2014 provides policy makers with insights and recommendations to address these difficult questions. It should serve to guide the dialogue, operations, and contributions from key development actors—from civil society and national governments to the donor community and international development organizations.

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International Financial Institutions Agree to Share Data

International Financial Institutions Agree to Share Data to Improve Development Outcomes and Lay the Groundwork for the Post-2015 Development Agenda

WASHINGTON, April 22, 2013/ — Recognizing the power of information to shape better policies, guide development programs and increase accountability, UN Secretary-General Ban Ki-moon, along with leaders of six multilateral financial institutions, announced today that they would strengthen inter-agency sharing and collaboration on issues related to data and statistical capacity building. This will provide the global community with better statistical tools to measure progress toward the Millennium Development Goals (MDGs) and post-2015 development Donald Kaberuka – AfDB President_.jpgagenda and improve the lives of people in the developing world.

This historic meeting of resourceful institutions confirmed my belief that by working together we can demonstrate the power of multilateralism to secure a better future for all. The first-of-its-kind meeting and agreement will help us further deepen our joint work to meet the MDGs and develop a post-2015 agenda for a more prosperous, equitable and sustainable future,” said Secretary-General Ban Ki Moon.

Leaders of the African Development Bank, Asian Development Bank, Inter-American Development Bank, International Monetary Fund, Islamic Development Bank, the United Nations, and World Bank Group signed a Memorandum of Understanding (MoU) to collaborate in strengthening statistical capacity in member countries and to facilitate the sharing of data, tools, standards, and analysis to improve statistics for monitoring development outcomes. The European Investment Bank and the European Bank for Reconstruction and Development offered their full support for the goals of the MoU and will contribute to the post 2015 development agenda in their areas of expertise.

Speaking on behalf of signatories to the MoU, African Development President and Meeting Chairman Donald Kaberuka said, “More timely and better statistics provide the basis for understanding the social and economic circumstances in which people live, enabling better policies and programs. Stronger statistical capacity will also help drive more sophisticated decision making, for example, through the application of natural wealth accounting, a clearer understanding of the distributional effects of social and economic programs, and the ability to take account of the impacts of decisions on women. Our work together will help build the foundation for a robust post-2015 Agenda.”

Leaders reaffirmed their commitments to achieve the Millennium Development Goals, and discussed the opportunity to collaborate in the development of the post-2015 development agenda. “We need better information and we need it more frequently. This is the only way for us to know whether we are making progress toward our goals of improving the lives of the poor,” said Jim Yong Kim, President of the World Bank Group. “Just as the Millennium Development Goals profoundly shaped our approach to development at the turn of the century, we expect the post-2015 development agenda to help us define a vision for a more socially, environmentally, and economically sustainable development path.”

Source: African Press Organization on behalf of the African Development Bank.

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African Countries’ Integrated Climate Resilience Solutions in the Water Sector | AfDB CIF Global 2012 Annual Report

AfDBTUNIS, Tunisia, February 27, 2013/ — The African Development Bank (AfDB) has laid out solutions some African countries are about to apply, with help from the AfDB and the Climate Investment Funds (CIF), to respond to complex problems that climate change is creating on their combined sectors of water, food and energy.

The article, part of the Climate Investment Funds (CIF’s) newly released 2012 Annual Report “Creating the Climate For Change” (https://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds.org/files/2012_Annual_Report.pdf), reflects Africa’s uniquely challenging circumstances in the water sector caused by climate change with repercussions in the agricultural and energy fields, and countries’ work to apply innovative solutions with AfDB and CIF support.

Claiming that “by 2020 up to 250 million people in Africa are projected to be exposed to increased water stress with disastrous effects on Africa’s most vulnerable,” the article cites examples of countries which are set to apply innovative integrated approaches to strengthening their water, agricultural and energy sectors. In particular, countries are going to focus on two areas of response with AfDB and CIF support: creating more reliable and accurate climate information, and building more durable, climate-resilient infrastructure across the sectors.

With AfDB and CIF support, Niger plans to improve its climate observatory system, research and optimize climate modeling, strengthen its early warning system, and expand communication on climate information to end-users. After seven episodes of disastrous drought, the country expects with these investment to boost food production and control the flow of fresh water to fields and pastures. Mozambique, on the other hand, plans to reinforce rural roads and rehabilitate irrigation and drainage systems to withstand weather extremes and sea water intrusions.

The AfDB is an implementing agency of the four-year-old US $7.6 billion CIF. “Creating the Climate for Change” (https://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds.org/files/2012_Annual_Report.pdf) showcases the evolution of the global CIF portfolio of investments for climate action in 49 developing countries, and spells out the shift into active implementation supported by the CIF and its implementing agencies throughout the developing world.

For further information on the CIF projects supported by the AfDB, visit “Financing Change: the AfDB and CIF for a Climate-Smart Africa” (http://bit.ly/XMe1gc).

About the Climate Investment Funds (CIF)

Established in 2008 as one of the largest fast-tracked climate financing instruments in the world, the US $7.6 billion CIF provides developing countries with grants, concessional loans, risk mitigation instruments and equity that leverage significant financing from the private sector, multilateral development banks, (MDBs) and other sources. Five MDBs – the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), Inter-American Development Bank (IDB), and World Bank Group (WBG) – implement CIF-funded projects and programs.

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Risks of 4 Degree Hotter World by End of Century

All regions of the world would suffer – some more than others – but the report finds that the poor will suffer the most.

WASHINGTON, November 18, 2012 – The world is barreling down a path to heat up by 4 degrees at the end of the century if the global community fails to act on climate change, triggering a cascade of cataclysmic changes that include extreme heat-waves, declining global food stocks and a sea-level rise affecting hundreds of millions of people, according to a new scientific report released today that was commissioned by the World Bank.

Turn Down the Heat, a snapshot of the latest climate science prepared for the World Bank by the Potsdam Institute for Climate Impact Research (PIK) and Climate Analytics, says that the world is on a path to a 4 degree Celsius[1] (4°C) warmer world by end of this century and current greenhouse gas emissions pledges will not reduce this by much..

“A 4 degree warmer world can, and must be, avoided – we need to hold warming below 2 degrees,” said World Bank Group President Jim Yong Kim. “Lack of action on climate change threatens to make the world our children inherit a completely different world than we are living in today. Climate change is one of the single biggest challenges facing development, and we need to assume the moral responsibility to take action on behalf of future generations, especially the poorest.”

The report says that the 4°C scenarios are potentially devastating: the inundation of coastal cities; increasing risks for food production potentially leading to higher under and malnutrition rates; many dry regions becoming dryer, wet regions wetter; unprecedented heat waves in many regions, especially in the tropics; substantially exacerbated water scarcity in many regions; increased intensity of tropical cyclones; and irreversible loss of biodiversity, including coral reef systems.

“The Earth system’s responses to climate change appear to be non-linear,” points out PIK Director, John Schellnhuber. “If we venture far beyond the 2 degrees guardrail, towards the 4 degrees line, the risk of crossing tipping points rises sharply. The only way to avoid this is to break the business-as-usual pattern of production and consumption.”

The report notes, however, that a 4°C world is not inevitable and that with sustained policy action warming can still be held below 2°C, which is the goal adopted by the international community and one that already brings some serious damages and risks to the environment and human populations.

“The world must tackle the problem of climate change more aggressively,” Kim said. “Greater adaptation and mitigation efforts are essential and solutions exist. We need a global response equal to the scale of the climate problem, a response that puts us on a new path of climate smart development and shared prosperity. But time is very short.”

The World Bank Group’s work on inclusive green growth has found that with more efficient and smarter use of energy and natural resources opportunities exist to drastically reduce the climate impact of development without slowing poverty alleviation or economic growth.

“While every country will take a different pathway to greener growth and balance their own need for energy access with energy sustainability, every country has green growth opportunities to exploit,” said Rachel Kyte, World Bank Vice President for Sustainable Development.

Those initiatives could include: putting the more than US$ 1 trillion of fossil fuel and other harmful subsidies to better use; introducing natural capital accounting into national accounts; expanding both public and private expenditures on green infrastructure able to withstand extreme weather and urban public transport systems designed to minimize carbon emission and maximize access to jobs and services; supporting carbon pricing and international and national emissions trading schemes; and increasing energy efficiency – especially in buildings – and the share of renewable power produced.

“This report reinforces the reality that today’s climate volatility affects everything we do,” Kyte said. “We will redouble our efforts to build adaptive capacity and resilience, as well as find solutions to the climate challenge.”

Kyte said, “The Bank commissioned the Potsdam Institute for Climate Impact Research and Climate Analytics to make a summary analysis of the latest climate science, as a means to better understand the potential impact of a 4°C warmer world in developing countries.”

Executive Summary

Full Report

Quotes (approved for attribution) from global leaders on the World Bank “Turn Down The Heat” report and the climate challenge