The private sector’s role in climate finance is increasingly subject to political and scientific debate. Yet there is poor empirical evidence of private engagement in adaptation and its potential contribution to the industrialized countries’ mobilization of 100 billion USD of annual climate finance from 2020 onwards to support developing countries to address climate change.
This paper presents an analysis of 101 case studies of private sector adaptation under the Private Sector Initiative (PSI) of the United Nations Framework Convention on Climate Change (UNFCCC) Nairobi Work Programme, examining them against 10 ‘adaptation finance criteria’ that were distilled from UN climate negotiation outcomes.
Results show that private adaptation interventions complement public adaptation activities. Yet the 10 adaptation finance criteria are not met, which demonstrates that the diplomatic UNFCCC conceptualization of financing adaptation is dissonant from the private-sector reality. For example, while the case studies’ investments are ‘new and additional’ to official development assistance (ODA), their ‘predictability’ remains unclear. And despite some commitment for ‘up-scaling’, plans and associated costs for doing so remain undisclosed.
Developed countries’ role in ‘mobilizing’ private financial resources under the PSI seems limited. It is unrealistic to expect that the UNFCCC alters existing criteria to suit private initiatives, or that the private sector aligns its initiatives to meet existing criteria. The authors advocate monitoring and reporting only of those private investments that principally finance adaptation. This practical way forward would allow private finance to meet criteria such as predictability, transparency, and mobilization, but would drastically reduce the amount of private investment that could contribute to reaching the 100 billion USD climate finance target.
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