Climate change poses a singular threat to humanity, and to The Rockefeller Foundation’s 109-year mission of promoting its well-being throughout the world. To meet our mission today, we must directly confront climate change.
One of the biggest obstacles to achieving net zero emissions globally by 2050 is the lack of financing from public and private sources for climate change mitigation and adaptation. This climate financing gap is made more acute by the use of inconsistent definitions, methodologies, and disclosures. Without standardized taxonomies, it can be difficult — if not impossible — for catalytic investors to trace financing flows and pinpoint gaps they can meaningfully target their dollars to.
A new report, authored by The Rockefeller Foundation in coordination with Boston Consulting Group, aims to help investors across the public-and private sectors gain clarity. What Gets Measured Gets Financed: Climate Finance Funding Flows and Opportunities aggregates data from across the climate finance arena, examines the methodologies of leading publications, and attempts to triangulate missing insights.
“We all know that more finance is needed for climate change, but until this report, there was no real way to compare how the many different types of financial flows were adding up relative to needs, or to determine where and into which sectors investment is most urgent,” said Veronica Chau, Partner & Director, Sustainable Investing & Social Impact at BCG. “This is a crucial decade for climate-finance actors to go from pledging support for climate initiatives to deploying it. But the absence of clear and reliable data has been a major roadblock.”
This report provides industry practitioners with a comprehensive view of how climate finance needs are evolving relative to flows and identifies where the most critical gaps in climate finance data reporting are, and where the need for taxonomic standards is most urgent.
“All actors, from country leaders to company leaders, must not only fulfill their climate commitments but also make their progress against those commitments transparent by improving the quality and consistency of their reporting,” said Elizabeth Yee, Executive Vice President of Programs, The Rockefeller Foundation.
The report also provides guidance for how the finance gap can be overcome and recommends that all key actors in the climate finance ecosystem play bigger, more active roles. Governments will need to trace climate finance needs, flows, and outcomes for necessary structural interventions such as tax incentives and subsidies. Corporations need to disaggregate climate finance initiatives rather than rolling costs and allocations under business operations in order for investments and performance to be accurately assessed. And market-return-seeking investors need to make the end use of their proceeds more transparent, so that others in the climate finance arena can better discern the gaps and needs that remain.
As the authors note, “the clock is ticking.” If the world is to meet its ambition of achieving net zero by 2050, the time to act is now.