Reflections on COP28: Inclusive Green Finance is here to stay

Getting the world’s nations to agree to a common text is a thankless task. Painful compromise is always involved.

COP 28 ultimately delivered an agreement calling for “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner.” While states suffering from the impacts of climate change may be disappointed in the final wording, the mention of a “just and equitable” approach is worth celebrating – two values which underpin financial inclusion.

Also worth celebrating is agreement on a loss and damage fund, which will help the world’s poorest and most vulnerable countries cope with climate impacts.

The AFI network was present and visible at COP 28, sharing insights on Inclusive Green Finance (IGF) at a side event co-hosted with the University of Luxembourg. For the uninitiated, IGF involves empowering vulnerable countries and communities to build resilience and mitigate climate impacts through access to financial services.

Inclusive Green Finance has come a long way in a short time. Since September 2017, when AFI members endorsed the Sharm El Sheikh Accord on Financial Inclusion, Climate Change and Green Finance, central banks have been steadily building national ecosystems to implement IGF solutions.

Papua New Guinea recently launched an Inclusive Green Finance Policy, and other AFI members including Egypt, Philippines, Fiji, Vanuatu and SEPS Ecuador have IGF initiatives or policies in place. AFI’s Working Group on Inclusive Green Finance has 65 member institutions and the number is growing rapidly. Inclusive Green Finance is now widely accepted as a key component of a central bank’s mandate.

At national level, central banks and financial regulators are increasingly important players in climate policy, contributing to the implementation of national determined contributions, channelling green finance, and greening the financial system.

The final wording of the COP28 Agreement will not satisfy everyone, but ultimately, deeds matter more than words. Around the world, I see communities, governments, central banks and regulators stepping up to the challenge posed by climate change, and taking action. And that gives us reasons to be cheerful.