UN Trade and Development Leads COP29 Baku Initiative for Climate Action
Baku, Azerbaijan, November 20, 2024 / TRAVELINDEX / The Baku Initiative for Climate Finance, Investment, and Trade (BICFIT) launched at COP29, the 29th UN Climate Change Conference , to bring together finance, investment, and trade to respond to the urgent need for climate action as the window for impactful action narrows. The initiative aims to strengthen and coordinate the response to climate challenges, fostering economic development and meaningful climate action. Climate finance is the backbone of any effective climate response, making it possible to mobilize resources where they are most needed.
- Unified climate action: Finance, investment, and trade for climate action.
- Global partnership: Led by Azerbaijan’s COP29 presidency, with UNCTAD, UNDP, and key international partners.
- Policy coherence: Trade, finance, and climate policies must go together.
- Support for developing nations: To bridge investment gap for countries most affected by climate change.
- UNCTAD’s focus: Transition investments, financial architecture reform, integrating trade and investment for climate action.
The initiative is led by the COP29 Presidency of Azerbaijan, co-facilitated by UN Trade and Development (UNCTAD) and UN Development Program (UNDP), in collaboration with other United Nations agencies and global partners, like the World Trade Organization (WTO) and the International Trade Centre (ITC).
“Trade, investment, and finance has to come together,” said UN Trade and Development Secretary-General Rebeca Grynspan alongside Azerbaijan’s Minister of Economy Mikayil Jabbarov and UNDP Administrator Achim Steiner.
Developing countries, despite being on the frontlines of climate impacts, receive minimal climate finance – only 1-2% of foreign direct investment in renewables, for instance, reaches Africa. This investment disparity is a serious barrier to the green transition, as high borrowing costs prevent low-income countries from accessing the capital needed to make impactful climate progress.
“We must have a policy coherence framework that will make these three very important elements, trade, investment and finance, for the future of the global economy to reinforce each other and allow developing countries to thrive and grow appropriately”, Ms. Grynspan said.
Coherence towards climate action
Weak coherence creates bottlenecks and hinders progress towards the scale and speed of transformation when the world is racing to rein in climate change.
Despite calls for sustainable initiatives, “we have trade practices that perpetuate unsustainable patterns – for example, clean energy technologies facing tariffs that are on average twice as high as those on fossil fuels”, said Ms. Grynspan.
Developing countries are on the frontlines of the climate crisis but at the back of queue for climate support. The annual sustainable investment gap across the developing world is about $4 trillion , up from 2.5 trillion a decade ago.
That is why, for example, reforming the international financial system is essential to enable private investment to reach where it is most needed. Multilateral development banks and development finance must scale up, share more risk, and crowd in private funds to support developing countries at long-term and affordable costs.
How UN Trade and Development can help
Looking ahead, UN Trade and Development can support countries in attracting climate foreign direct investment and knowledge sharing and capacity building for national climate and sustainable development ambitions.
It will assist countries in developing “green free economic zones” that seamlessly integrate sustainable development principles within free economic zones, while collaborating with the sustainable investment community.
The organization will also work to restore trust in sustainable finance. A recent decline in sustainable fund investments highlights concerns around greenwashing and transparency. UNCTAD will partner with leaders in sustainable finance to ensure that these funds genuinely support the green transition, directing resources to the sectors and regions where they are needed most.
It will continue advocating for structural reforms to the international financial architecture to help ensure that key players – such as multilateral development banks – are fit for purpose and ready to contribute to finance sustainable development.
The organization will also support countries to prepare their updated national climate action plans to better incorporate a trade and investment policy perspective.
About UN Trade and Development
UN Trade and Development (UNCTAD) is dedicated to promoting inclusive and sustainable development through trade and investment. With a diverse membership, it empowers countries to harness trade for prosperity.
