Four Corners of Climate Action: How Unified Approach Can Attract Global Investment

Ebipere Clark

Emerging economies are discovering that a Whole of Government Approach (WOGA), coupled with a Country Platform for Climate Action (CPCA), can be the key to unlocking climate finance

On November 15, 2022, at the G20 Leaders’ Summit in Bali, in a move that turned heads in the global investment community, Indonesia secured $20 billion in climate finance through its Just Energy Transition Partnership (JETP).

This wasn’t just about the money – it’s a testament to the power of a unified government approach to climate change and a well-structured platform for attracting investment.

As climate challenges intensify, countries are finding that traditional, siloed efforts fall short. Enter the Whole of Government Approach (WOGA) and the Country Platform for Climate Action (CPCA) – two interlinked strategies reshaping how emerging markets and developing economies (EMDEs) tackle climate change and court international investors.

The WOGA recognises that climate change touches every aspect of governance, necessitating coordination across the “Four Corners” of climate policy: Foreign Affairs & Geopolitics, the Energy/Infrastructure & Industrial Sectors, the Environmental & Nature Sectors, and the Economy & Finance Sectors.

In Foreign Affairs, countries like Brazil are leveraging climate diplomacy to secure international support for Amazon preservation. On the Energy front, India’s ambitious solar projects demonstrate how cross-sector collaboration can drive renewable energy adoption. Environmental initiatives, such as Costa Rica’s Payments for Ecosystem Services program, showcase innovative approaches to conservation that require multi-ministry cooperation.

Meanwhile, in the economic sphere, Nigeria’s Sustainable Banking Principles – which are being updated at this moment – illustrate how domestic financial regulations can align with international climate goals to attract private sector investment.

The intersection of these corners is where the real magic happens. For instance, Vietnam’s recent success in attracting green investment stems from its ability to align diplomatic efforts, energy sector reforms, environmental commitments, and financial incentives into a coherent package.

This should come as no surprise. Developed economies have already demonstrated the power of WOGA in crafting transformative climate policies. The United States Inflation Reduction Act (IRA) is a prime example, coordinating efforts across energy, finance, and environmental sectors. With $369 billion allocated for climate and clean energy initiatives, the IRA is projected to reduce US emissions by 40% by 2030. The European Union’s Carbon Border Adjustment Mechanism (CBAM) similarly showcases WOGA in action.

This policy, born from coordination between trade, environment, and industry sectors, aims to prevent carbon leakage and level the playing field for EU producers. As it’s phased in from 2023 to 2026, CBAM is set to reshape global trade patterns in carbon-intensive industries. China’s National VI-b Emission Standard for vehicles is another testament to WOGA’s effectiveness. This stringent standard, resulting from close collaboration between environmental regulators and the auto industry, is pushing Chinese manufacturers to the forefront of electric vehicle technology.

For EMDEs, the WOGA offers significant advantages. When a government is seen to speak with one voice on climate issues, it significantly reduces perceived risks. This coordinated approach can improve policy coherence and boost investor confidence, crucial for attracting much-needed climate finance.

However, a coordinated government approach alone isn’t enough. This is where the Country Platform for Climate Action comes in. Inspired by successful models like the JETPs, CPCAs serve as a focal point for climate investment, consolidating initiatives across sectors – from manufacturing to solid mineral mining – into an attractive package for investors.

South Africa’s experience with its JETP offers valuable lessons. By creating a unified platform that addresses everything from coal plant retirements to worker retraining programs, the country has been able to attract $8.5 billion in climate finance. “The idea is to create a partnership between the central government and a set of international development partners to jointly coordinate international public finance in support of common goals.” (ODI, 2024 section 1)

CPCAs can attract diverse forms of climate finance, from multilateral development bank loans, philanthropic catalytic capital, to private equity investments. By de-risking investments and improving the business environment, they can help EMDEs tap into the growing pool of global green capital.

Implementing WOGA and CPCA isn’t without challenges, particularly for resource-constrained economies. “Strong central government departments are needed to negotiate with donors and to support coordination across departments and agencies. The government will also need specific knowledge and capacity to engage with the private sector and develop an effective investment pipeline. The government may need to rapidly build these capabilities by developing new teams or contracting the necessary expertise.” (ODI, 2022 Conclusions)

Despite these hurdles, the potential benefits are too significant to ignore. For EMDEs looking to replicate these successes, the path forward involves clear administration will, robust inter-ministerial coordination mechanisms, developing clear long-term climate strategies, and creating well-structured CPCAs.

As global capital increasingly seeks out sustainable investments, EMDEs that adopt these approaches stand to gain a competitive edge. “The JETP, then, can be interpreted as a far-sighted effort to use international finance to smooth an inevitable energy transition” (ODI, 2024 section 6.3)

For policymakers in EMDEs, the message is clear: in the race to attract climate finance, a unified government approach coupled with a robust Country Platform for Climate Action could be the winning formula.

Moreover, a well-implemented WOGA and CPCA can provide EMDEs with the strategic flexibility to navigate the increasingly complex geopolitical landscape. As tensions rise between the US, EU, and China, and as groupings like the G7 and BRICS vie for influence, EMDEs with coherent climate strategies will be better positioned to balance competing interests and leverage opportunities across different blocs. This adaptability could prove crucial in securing diverse sources of climate finance and technology transfer. As the global community grapples with the climate crisis, those countries that can effectively coordinate their efforts, present compelling investment opportunities, and deftly maneuver through shifting geopolitical currents will be best positioned to lead in the green economy of the future.

Ebipere Clark is the Managing Partner, leads Frontier-Alpha LLP, a policy advisory firm specialising in infrastructure and financing, with the emphasis on sustainability, climate and digital solutions.