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“We really believe change is possible”: UNEP’s Climate finance chief on why there is still hope

Ivo Mulder believes that the pace of change within climate finance will catch a lot of people by surprise.

By Nick Ferris

From the sleek streets of Midtown Manhattan to the historic Palais des Nations on the banks of Lake Geneva, most United Nations offices are a world away from the geopolitical challenges they were established to address.

But the United Nations Environment Programme (UNEP) – perhaps tasked with the knottiest problem of all – is based in Nairobi, Kenya, a country very much on the front line of the climate crisis. While the world has warmed 1.2C since industrial times, Africa is warming twice as fast as the global average. A large share of people in countries like Kenya (where the figure is more than 40 per cent) continue to depend on agriculture for their livelihoods, which is increasingly fraught with climate risk.

For Ivo Mulder, who is head of climate finance at UNEP, working in Kenya has been a useful reminder of all that is at stake in the agency‘s mission to protect the environment.

“Climate change is making people lose their livelihoods in Kenya. In the North of Kenya, the droughts are already devastating”, the Dutch-born programme leader tells me when we meet on a rainy afternoon in central London. “UNEP is the only UN agency based in the Global South, and living there and actually seeing how climate change is affecting people made a very important impression on me”.

The 43-year-old began his career as an environmental economist working in NGOs consultancies like KPMG. He has worked for UNEP since 2010, rising up the ranks since joining as a programme officer in the Water, Ecosystems and Biodiversity department.

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After nearly three years in Nairobi, since 2017 Mulder has been based in the “very different ” city of Geneva. But his belief in the importance of UNEP’s mission of solving the climate and ecological crises remains. “It is very easy to be ‘doom and gloom’ about what is happening to the world”, he says. “But people who come to work at UNEP tend to be people who want to be part of the solution, and they really believe that change is possible”.

There are indeed many reasons to be hopeful, from the fact that 90 per cent of the global economy has committed to net zero targets, to the record roll-out of solar and wind power around the world, to the policy packages driving record levels of green investment in the US and EU. But climate finance for developing countries – the field where much of Mulder’s work is focused – is trailing behind those achievements.

At the 2009 Cop15 UN climate conference in Copenhagen, developed countries committed to mobilising $100bn in climate finance per year for developing nations by 2020. But data tracked by the OECD shows that only $83bn had been raised in that year, which is a figure only marginally higher than the previous two years.

The finance requirement in the Global South is immense, encompassing not only efforts to mitigate climate change, but also to adapt to it and to pay for loss and damage that results from climate change, as well as to help countries develop (around 770 million people globally still have no access to electricity, with the number increasing during the pandemic). Research commissioned by the British and Egyptian governments (the Cop26 and 27 hosts respectively) found that the true annual climate finance requirement for developing countries will be $2trn per year by 2030.

How can Mulder marry his optimism to this reality? “It’s true that rich countries are only providing a tiny percentage of what is currently required for climate finance, and a lot of people would argue that the $83bn provided is an inflated figure, because so much is provided as loans rather than grants”, he says.

“What I do find very promising is that there is more data being measured, more accountability in international agreements, and also more and more examples of developing countries finding ways of raising climate finance domestically even if international finance flows fall short.”

Mulder cites some successful examples. Costa Rica imposed a tax on fuel in the 1980s and used the resulting income to boost nationwide forest cover from 20 per cent to 50 per cent today. More recently, last year Uruguay issued innovative sovereign bonds with an interest rate tied to fulfillment of its climate commitments. This helped to ensure that government spending is aligned with the countries’ climate targets.

But low-income countries continue to have far weaker purchasing power than rich countries, and they face borrowing costs of between 10 and 20 percent while Western nations usually pay a little over zero. “The financial system is, to put it bluntly, rigged against the Global South,” the president of Kenya, William Ruto, said at a conference held by Sudanese philanthropist Mo Ibrahim in Nairobi in April.

It is also not only in climate change where finance is required. In December 2022, the Kunming-Montreal Global Biodiversity Framework – cited by many as a “Paris Agreement for nature” – was adopted by parties at the fifteenth annual UN biodiversity conference. The package include a target of mobilising $200bn a year in nature and biodiversity-related funding.

A cynic might say that this target could run into the same problems as the $100bn climate finance target for developing countries has done. But much of Mulder’s climate finance work at UNEP is to try and ensure such a thing does not happen.

“When it comes to renewable energy and energy efficiency, it is now quite possible – whether in the UK or in Uganda – [for companies] to quantify the value of an investment”, says Mulder. “When it comes to things like our food system, value lies in all kinds of places, from food on the kitchen table to the natural world where food comes from.

“UNEP does not have massive financial resources, but we are demonstrating to financiers through catalytic, project-focussed investments that it can make good business sense to direct money towards companies that have a positive nature and climate impact. And we also make it clear what the standard needs to be for projects to be classified as good for the environment.”

The mechanisms that Ivo’s team have developed include lending initiatives providing loans to farmers in countries such as Brazil, China, and Nicaragua, which give more favourable terms than a standard loan might provide. In return, however, the farmers are required to meet positive environmental and social indicators.

Another mechanism is a “reimbursement grant facility” for impact investors, which helps cover the cost of expensive due dilligence assessments that investors will have to undergo if they are putting money for the first time into new nature-focused investments like forestry or sustainable farming in remote areas.

Establishing international financing operations in the climate space remains hugely complex – and not least because the multi-billion-dollar international financial industry, with buzzwords like “climate finance” and “ESG”, has long been rife with greenwashing.

As an example, a 2022 analysis from the ratings agency Standard and Poor’s found that among 12,000 equity mutual funds and exchange-traded funds representing more than $20trn in market value, some 11 per cent were aligned with the Paris Agreement goal of limiting global warming to “well below” 2°C. When the same analysis was carried out on 300 funds that used green or environmental language in their names, or to describe their approach, only 12 per cent were deemed to be Paris-aligned, nearly the same result as for general funds.[1]

But in the face of “green misinformation”, Mulder’s team at UNEP has been able to demonstrate that projects truly beneficial for climate and nature are possible.

“In our initiatives, I am not so worried about greenwashing, as we develop our own environmental-social framework”, he says. “To solve the greenwashing issue, you have to start somewhere: We develop methodologies and produce data – but it is up to the companies making pledges, and governments making regulations, to demand that higher standards are reached, and greater disclosure is made”.

The kinds of nature-based climate solutions that UNEP supports have also received some criticism from environmentalists who argue that such projects encourage hard-to-monitor carbon offsetting rather than direct mitigation efforts. There are also concerns over whether we can be sure solutions like land reforestation are sufficiently permanent, as well as the fact that land used for climate solutions should not be unfairly requisitioned from people living and working there.

Mulder acknowledges these as valid concerns, but points out that all paths to net zero involve some level of carbon sequestration, even if the focus is on emissions reduction. “Investing in carbon credits can never absolve from making emissions cuts: there needs to be a hierarchy of priorities”, he says. “On the supply side, we need robust criteria to ensure that all projects are fair, and well-monitored.”

UNEP’s efforts can feel like “a few drops in the ocean”, says Mulder. But for him, the work that the organisation is doing remains vital. By creating solutions to intersecting issues like climate, nature, global development, and food systems, Mulder explains, one can begin to imagine a world that meets the challenges of the climate and nature crises systematically, and for the long haul.

The crisis is urgent, but we need patience, too. As a starting point, Mulder says a good outcome of November’s Cop28 UN climate conference would be to see that countries have met their $100bn climate finance target – and that global emissions will, finally, be seen to be on a downward trend.

“It can feel like things are not changing,” adds Mulder, “but I do think we need a certain measure of hope in this fight. We are living in disruptive times, and with so many new and innovative developments both in finance and beyond, my feeling is that the pace of change will catch a lot of people by surprise”.

This piece features in the latest Spotlight supplement on Energy and Climate Change.

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