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The climate consistency goal and the transformation of global finance

Author

Listed:
  • Luis H. Zamarioli

    (Frankfurt School of Finance & Management
    Humboldt-Universität zu Berlin)

  • Pieter Pauw

    (Frankfurt School of Finance & Management
    Utrecht University
    Stockholm Environment Institute
    German Development Institute)

  • Michael König

    (Frankfurt School of Finance & Management)

  • Hugues Chenet

    (University College London
    Risk Foundation)

Abstract

Controversy remains over the climate consistency of finance flows despite its centrality in the Paris Agreement (Article 2.1(c)). Two main interpretations dispute the goal’s reach, threatening its transformational potential. If left unresolved, the controversy may also mask trade-offs, allowing for unintentional harm to countries already vulnerable to climate change. Here we build on four methods to show that Art. 2.1(c) comprises a new meaning of ‘finance’ under the United Nations negotiations. In contrast to climate finance provision to developing countries (Art. 9), the climate consistency of finance flows represents a purpose that relies on support and action to transform the global financial system. Implementation of Art. 2.1(c) requires engagement by governments and non-state actors, including the financial sector. While solutions for Art. 2.1(c) will need to be adequate for countries’ contexts, accounting of trade-offs should ensure some level of convergence towards a global, timely and equitable progress towards climate consistency of finance flows.

Suggested Citation

  • Luis H. Zamarioli & Pieter Pauw & Michael König & Hugues Chenet, 2021. "The climate consistency goal and the transformation of global finance," Nature Climate Change, Nature, vol. 11(7), pages 578-583, July.
    • Handle: RePEc:nat:natcli:v:11:y:2021:i:7:d:10.1038_s41558-021-01083-w
    DOI: 10.1038/s41558-021-01083-w
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    Cited by:

    1. Stephen Minas, 2022. "Financing climate justice in the European Union and China: common mechanisms, different perspectives," Asia Europe Journal, Springer, vol. 20(4), pages 377-401, December.
    2. Carè, R. & Weber, O., 2023. "How much finance is in climate finance? A bibliometric review, critiques, and future research directions," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Ji, Qianfeng & Li, Kefeng & Wang, Yuanming & Feng, Jingjie & Li, Ran & Liang, Ruifeng, 2022. "Effect of floating photovoltaic system on water temperature of deep reservoir and assessment of its potential benefits, a case on Xiangjiaba Reservoir with hydropower station," Renewable Energy, Elsevier, vol. 195(C), pages 946-956.
    4. Weko, Silvia & Goldthau, Andreas, 2022. "Bridging the low-carbon technology gap? Assessing energy initiatives for the Global South," Energy Policy, Elsevier, vol. 169(C).

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