Authorisation letter to co-chairs of the High Level Expert Group on Climate Finance

Independent High-Level Expert Group

Dear Dr. Songwe and Lord Stern,

On behalf of COP26 Presidency and incoming COP27 Presidency and following the welcoming by COP26 President and COP27 President Designate of the new Independent High-Level Expert Group at the May Ministerial meeting in Copenhagen on 13th May 2022, we are pleased to formalise in writing our endorsement of this initiative with you both as co-chairs of the group on the basis of the attached Terms of Reference. 

Before your work begins in earnest, we would like to reiterate the support for this independent group from both the COP26 Presidency and the incoming COP27 Presidency and to thank you for engaging in this key issue.  We understand that under your guidance the group will work in close coordination and collaboration with the UN Climate Change High-Level Champions. 

In the critical decade ahead of us, scaling up investment and finance to deliver on climate ambition and development goals is of utmost importance. We look forward to seeing the group’s work coming to fruition as you reflect on the ambition captured within the Glasgow Climate Pact and look to build momentum towards Sharm el-Sheikh and beyond.

Yours Sincerely,

Matt Toombs
Director, Finance and Business, COP26 Presidency

Ambassador Wael Aboulmagd
Special Representative of the COP 27 President Designate

High-level Expert Group on scaling up investment and finance to deliver on climate ambition and development goals

Supported by the COP26 Presidency and incoming COP27 Presidency

Terms of Reference

The COP26 Presidency together with the incoming COP27 Presidency are pleased to launch a new Independent High-Level Expert Group this summer co-chaired by Vera Songwe and Nicholas Stern.

The High-level expert group will work in coordination and collaboration with the UN Climate Change High-Level Champions.

This independent group will help develop and put forward policy options and recommendations to encourage and enable the public and private investment and finance necessary for delivery of the commitments, ambition, initiatives, and targets of the UNFCCC, Paris Agreement further reflected within the Glasgow Climate Pact, building momentum and further action for the Sharm el-Sheikh agenda and beyond.

The diminishing window of opportunity to act requires an exceptional push on the scale, quality, and composition of investment and finance, particularly to developing countries: to close the adaptation gap, to build resilience and protect the vulnerable from climate change; to drive systemic change and innovation for carbon neutral transformation in the context of just transition; and to protect and restore natural capital.  

Given this imperative, and building on available work and data, the group will:

  • Assess the investment requirements of developing countries including emerging markets to deliver on action at scale and on time on mitigation, adaptation/resilience, just transition and sustainable and inclusive development.
  • Develop ideas and proposals on how to accelerate investment programmes in a purposeful way around projects, plans, the right policy mix, appropriate financial instruments and finance, for example, through the use of country platforms.
  • Consider how to make market mechanisms work more effectively and efficiently to direct capital where needed.
  • Set out the implications for near and medium-term action and targets for mobilizing all pools of finance commensurate with the scale and urgency of needs.  This would include actions needed to tackle the growing pressures on debt; domestic resource mobilization and international tax cooperation; the potential to tap the large pools of private finance; scaling up support from multilateral development banks and other development finance institutions; bilateral and multilateral concessional finance; and new and innovative financing instruments and solutions such as the use of SDRs, debt swaps, voluntary carbon markets and leveraging private philanthropy.
  • Propose a set of de-risking tools to facilitate the translation of financial assets into financial flows for a strengthened response to climate change.
  • Propose how to utilise the complementary strengths of different pools of finance to ensure the right kind of finance and reduce the cost of capital rather than simply focusing on the aggregate number; align all finance with sustainability, including climate goals, with enhanced transparency to ensure all can partake in the drive to net zero and foster climate resilience in line with Article 2; and create the necessary partnerships to deliver concrete results.
  • Assess and make proposals on how to tackle shortcomings in the quality of and access to climate finance and improve its transparency.

The focus of the work would be primarily on the delivery of finance, and it would be informed by the assessment of investments and the means to achieve just transition through unlocking the necessary and appropriate investments at scale and on time. The findings and proposals of the group will inform the UNFCCC deliberations on setting a new collective quantified goal from a floor of US $100 billion and the broader climate and development finance action agenda. The setting of a new goal from a floor of the $100bn provides a singular opportunity to set the right level of ambition, framework, tools, instruments and effective incentives for mobilising the finance needed to deliver on the Paris goals and the SD Agenda.

The group would comprise of around 15-20 high level experts drawn from all regions of the world and from both the public and private sector, with high credibility and expertise on the issues to be taken up by the group. The membership would be determined by the co-chairs in consultation with the COP26 and COP27 Presidencies and UN Climate Change High Level Champions.

The co-chairs would convene 2-3 meetings to discuss the key issues and proposals for action based on background papers prepared in advance. The co-chairs would prepare and submit a report in advance of COP27 based on the work and deliberations of the group. Prior to the finalization of the report, the co-chairs would convene, in cooperation with the UN Climate Change High Level Champions, a high-level roundtable, under the auspices of the COP Presidencies, that would include the members of the group and relevant stakeholders.- Additionally, the group will provide a short submission to the UNFCCC ahead of the August 2022 deadline for submissions on the new collective quantified goal on climate finance (this submission will reflect the group’s views and recommendations and not the COP presidencies’ positions).

The group would engage with key stakeholders including the COP26 and COP27 Presidencies, the UN Climate Change High Level Champions, UN/UNFCCC, the co-chairs of the new quantified goal process, International Financial Institutions (MDBs, Regional Development Banks, National Development Banks, IMF, OECD, etc), private sector (Glasgow Financial Alliance for Net Zero and Global Investors for Sustainable Development), and private philanthropy.  It would interact with and build on other initiatives such as the IMF-World Bank High-Level Advisory Group on Sustainable and Inclusive Recovery and Growth and the UN Informal Working Group on the SDG Stimulus Plan.

The work and deliberations of the group would be supported by the Economic Commission of Africa and the Grantham Research Institute on Climate Change (LSE), the Faculty of Economics and Political Science (Cairo University), the Egyptian Center for Economic Studies, and Brookings Institution. Amar Bhattacharya will serve as Executive Secretary and support the co-chairs in the organization of the work and the preparation of the report.

The work of the group would be supported by the COP26 and COP27 Presidencies and private philanthropy.