COP27 must boost Africa’s adaptation to the physical risks of climate change, says Amal-Lee Amin, Head of Climate Change at British International Investment.
Africa contributes less than 3% to global emissions but is the most vulnerable continent in the world to the negative impacts form climate change.
The UN Environment Programme (UNEP) says: “This vulnerability is driven by the prevailing low levels of socioeconomic growth in the continent. While climate change is global, the poor are disproportionately vulnerable to its effects. Because they lack the resources to afford goods and services, they need to buffer themselves and recover from the worst of the changing climate effects. This is the case in Africa.”
UNEP wants to see more investment diverted towards supporting African countries in meeting their nationally determined contributions (NDCs).
Next month’s COP27 Summit will be held in Egypt’s Sharm El Sheikh, providing opportunity for policymakers to focus on Africa and develop new initiatives and strategies investment for the most needed areas.
Feeding into that debate is Amal-Lee Amin, Head of Climate Change at British International investment (BII), a UK government-owned institution which provides development finance an impact investment in Africa, Asia and the Caribbean.
Ahead of COP27, BII launched The African Climate Conversation (TACC) which acts as a platform “for a wide range of views from Africa’s leading thinkers and visionaries on the climate emergency; a place where ideas, insights and solutions could be expressed and shared”.
Amin says: “There are a lot of opportunities for many African countries to grow their economies socially, economically, in a way that is consistent with net zero targets. As an impact and development finance investor, we’re aiming to help in terms of attracting and mobilising private investment, and the platform is a way of ensuring Africans are part of negotiations.”
She adds: “The platform brings perspectives from those who are on the ground and who are implementing the projects.”
BII hopes that contributions to TACC will “shape conversations at COP27 in Egypt and beyond”.
Amin wants to build on the progress made at COP26, which included commitment from 197 countries to the Glasgow Climate Pact, reinforcing developed countries’ responsibility to fulfil their pledge of providing US$100 billion a year to developing countries to help them meet their Paris Agreement targets. The lack of progress since puts emerging and developing economies at the top of the COP27 agenda.
COP26 also saw the launch of the two-year Glasgow–Sharm el-Sheikh work programme which represents a step towards achieving the Global Goal on Adaptation (GGA) – the system for tracking and assessing countries’ progress on adaptation actions, and for catalysing adaptation funding as outlined in the Paris Agreement.
Amin says: “There is progress with implementing some of the commitments from the COP26 summit, but there is a wider recognition that the international community needs to pull together particularly for the poorest and most heavily indebted countries, of which many are in Africa. The conversation needs to go beyond the COP context and start looking at what the IMF and World Bank are doing.”
The two institutions, and multilateral development banks in general, have come under increasing pressure to evolve from established practices to attract more private investment to climate mitigation and adaptation projects in EMDEs, notably through innovation in blended finance.
She adds: “At COP27, eyes will be on progress and initiatives that are delivering on commitments made under the Paris Agreement and in Glasgow. Critical will be the extent to which emerging markets are benefiting from the global transition to prosperous and green economies.”
For the last two years, BII has produced an Emerging Economies Climate Report which surveyed senior executives working across its portfolio of companies and funds in Africa and Asia.
The 2022 report reveals how climate change is becoming an increasingly significant reality for businesses and investors in Africa and Asia. A total of 58% of respondents had experienced an extreme weather event over the period.
Seventy per cent say they are at least somewhat concerned about the physical risks related to climate change. Two-thirds say they are at least somewhat concerned about the risks associated with a transition to a low-carbon economy.
Eighty-six per cent thought that climate change would negatively impact their firms in the decade to come; nearly all (94%) thought the international community has a duty to support emerging economies respond to climate change; and 92% say that better and more targeted investment is needed to reduce emissions and vulnerability.
The report highlighted demand for capital to minimise the physical impacts of climate change and transition to low-carbon energy source, as well as for training and education. It also noted responsiveness to changing circumstances, with increasing numbers of firms adapting their financial strategy or planning due to climate change.
“Nearly half of respondents reported that they are offering new climate-friendly products and a similar number are excluding investments that have a negative impact on the planet,” the report said, noting also that businesses were taking steps to reduce their vulnerability to the physical effects of climate change.
Amin wants to see private finance directed to clean energy and mobility solutions; green buildings and new adaptation and resilience technologies, arguing “there is huge potential to address the climate crisis in a way that delivers prosperity and supports a just transition to a new, green economy”.
Amin points to the investment opportunities arising from Africa’s burgeoning green hydrogen projects, including a US$9.4 billion plant in Namibia which is scheduled to enter production in 2026.
Meanwhile this February, South Africa announced plans to support a pipeline of green hydrogen projects worth US$17.8 billion over the next decade.
Amin says Kenya, Morocco and Nigeria are also hoping to implement green hydrogen projects in the future.
“We are seeing opportunities in green technologies far earlier across Africa than we originally thought. Africa could take an early lead on green hydrogen,” she says.
Amin also sees opportunities in solar power as demonstrated by BII’s US$50 million commitment as part of a consortium of backers for ACWA Power, which will build the 100 MW Redstone Concentrated Solar Power project in South Africa.
As an impact investor, BII measures projects against three objectives: productivity; sustainability ad inclusivity.
Each of these objectives are assessed against a set of measures such as ‘degree of need’; ‘climate mitigation’ and ‘reach to low-income populations’. Investments will then receive an impact score. The projects are monitored regulatory and impact scores updated accordingly.
Amin says this ongoing evaluation helps ensure resilience to short-term weather impacts and longer-term climate change impacts.
“It is critical that we understand the impact we make and report that back to investors,” Amin says, but she notes “it is difficult for companies in developing countries to report climate disclosure effectively.”
She would like to see policymakers take steps to ensure more effective reporting such as implementing Taskforce on Climate-related Financial Disclosures (TCFD).
“Governments need to make it easier for companies which in turn makes it easier for investors to understand climate risk. There needs to be more done to remove barriers to investment in Africa.”
With all eyes on Egypt next month, Amin hopes that progress is made.
“I am optimistic for COP27, but there is an awful lot of work to do.”