Fostering transparency in green financing

The global community is at a critical juncture as it navigates the challenges of climate change, with the hopes of achieving net-zero emissions by 2050. As COP27 approaches its conclusion, the focus on fostering transparency and trust in green financing has never been more paramount. To delve into the world of green finance allocation, CNBC Africa spoke with Mikko Ollikainen, the Head of the Adaptation Fund. Ollikainen shed light on the recent investments and pledges the fund has received, amounting to a commendable $225 million. While Ollikainen expressed gratitude for the support, he emphasized that the current pledges represent only a fraction of the financing needed to adequately address adaptation needs in developing countries, particularly in Africa. In discussing the conditions tied to the pledges, Ollikainen highlighted the Adaptation Fund's unique approach, stating that the funding comes with no strings attached and is driven by the principle of country-drivenness under the Paris Agreement. This approach allows flexibility in addressing country-specific adaptation needs, a feature that has garnered praise from developing country partners. As the fund marks its 15th year, Ollikainen reflected on the progress achieved in enhancing resilience to climate impacts. He cited examples of successful projects that not only bolstered communities against climate-related challenges but also other unforeseen crises like the pandemic. However, with an active project pipeline of unfunded projects amounting to $380 million, the Adaptation Fund faces a growing demand for financial support. Ollikainen underscored the importance of scaling up funding to meet the escalating needs, emphasizing the urgency of supporting vulnerable countries in adapting to climate change. One key initiative to boost funding is the allocation of a share of proceeds from an international tax under Article 6, aimed at climate mitigation. While this mechanism is not yet in effect, it holds promise for bolstering the fund's resources in the future. Despite the challenges posed by increasing demand, Ollikainen expressed gratitude for the support from developed countries, including major emitters. He noted a positive trend in resource mobilization, with a threefold increase in funding generated last year. However, he reiterated the need for sustained efforts to bridge the substantial funding gap, which stands at over $100 billion annually. As the Adaptation Fund charts its course for the future, Ollikainen remains optimistic about the fund's ability to make a meaningful impact in assisting countries in climate adaptation and resilience building.