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Report

Investing in climate, investing in growth

10 years after the Stern Review on the Economics of Climate Change, this report produced by the OECD lays out the case for governments to pursue an integrated policy approach that combines climate action with fiscal initiatives and structural reforms and concludes that countries can achieve strong and inclusive economic growth while reorienting their economies towards development pathways with low greenhouse gas emissions and high resilience to the effects of climate change. The report sees potential to increase long-run output by up to 2.8% on average across G20 countries in 2050, with a net effect of nearly 5% if mitigated climate impacts are taken into account. Importantly, growth impacts are positive in the near-term too: the report sees potential for a net GDP effect of around 1% for G20 economies by 2021.

Key points

The 7th chapter describes major trends in private financing for infrastructure and the roles of different private actors and sources of finance. It then explores what is needed to mobilise private finance for the transition, including how to address factors hindering private investment, and the types of instruments and transaction enablers governments have at their disposal. It considers the role of specialised development banks and development finance institutions, and how greater transparency and signaling in the global financial system might improve its capacity to respond to opportunities arising from the transition, while strengthening resilience to climate risks.

Stating that: “considering the scale of financing required, development banks and development finance institutions will be essential in helping countries to deliver on their Nationally Determined Contributions (NDCs), both within and outside the G20”, the chapter details the role of the three types of development finance actors “worthy of attention”: national development banks (NDBs), multilateral development banks (MDBs), and bilateral development banks and development finance institutions (DFIs).