In a recent report, the Commission’s expert group on sustainable finance has highlighted the critical importance of low- and middle-income countries (LMICs) receiving technical and financial support from Europe to develop credible sustainable finance frameworks. The group has recommended that the EU provides targeted financial and technical support to LMICs through a Sustainable Finance Advisory Hub, with the aim of helping them establish sustainable finance frameworks and promoting interoperability.
The report, prepared by the Commission’s High Level Expert Group, emphasizes the need to support LMICs that are disproportionately vulnerable to climate change and nature-related risks. The goal is to attract sustainable finance and investment that will enhance their resilience to these challenges.
Members of the expert group, including Alice Ruhweza, Senior Director of Policy Influence and Engagement at WWF, have urged swift implementation of the recommendations to aid LMICs on their sustainable finance journey. They have underscored the necessity for sustainable investment across various sectors in order to achieve a just sustainable transition. This includes investments in infrastructure, agriculture, natural capital, health, education, climate adaptation, and clean energy.
Maud Abelli, Lead WWF Greening Financial Regulation Initiative, has highlighted the vulnerability of LMICs to climate change and the importance of strengthening their resilience. Furthermore, it has been stressed that integrating climate- and nature-related considerations into financial and insurance regulation and supervision is crucial for maintaining financial stability.
Sebastien Godinot, Senior Economist at WWF European Policy Office, has noted the progress made by the European Commission in sustainable finance frameworks. The call to work more closely with partner nations in LMICs, including Brazil and South Africa, has been made in order to promote ambitious sustainable finance frameworks on the international stage.
The report includes several recommendations for fostering credible and interoperable sustainable finance frameworks. These include providing technical assistance and support through a Sustainable Finance Advisory Hub, comparing and enhancing the interoperability of taxonomies, and exploring modalities to support greater interoperability.
Additionally, the report addresses the need to make EU external financial support more agile and fit for purpose to scale up sustainable project development. It suggests the establishment of a single EU digital platform hosting sustainable projects in LMICs, as well as facilitating timely access and involvement of relevant actors and EU instruments for collective action.
Furthermore, the report highlights the importance of promoting investments in the preservation of nature in LMICs. It recommends tapping more private capital for restoring and preserving natural capital, building on innovative financial mechanisms such as green or sustainable bonds related to biodiversity conservation.
Overall, the report emphasizes the critical role of sustainable finance in promoting stability and resilience in LMICs, and calls for concerted efforts to support these countries on their sustainable finance journey. It represents a significant step towards addressing the unique challenges faced by LMICs in the face of climate change and environmental risks.
For further information, you can refer to the High-Level Expert Group’s report on scaling up sustainable finance in low and middle-income countries and WWF’s work in the field of sustainable finance.