Environmental finance

 A UNDP partnership with the government of Odisha in India, supported by the Australian Agency for International Development is helping communities in Puri district adapt to extreme weather events. Photo: Prashanth Vishwanathan/UNDP India

In a world challenged by scarcity of financial resources and escalating threats to the environment, countries often struggle to implement transformative sustainable development strategies. At the same time, the development and integration of financial markets have increased the number of options to choose from to advance investments in sustainable development. New opportunities have emerged for catalyzing and pooling resources to preserve the environment and better manage risks.

UNDP offers strategic assistance in catalyzing investment into green technologies, practices and enterprises that will pave the way to an inclusive and sustainable development pathways. Operationally, UNDP works with countries to develop financial solutions in:

  1. Scaling Up Climate Change Adaptation and Mitigation
  2. Sustainable Management of Ecosystem Goods and Services
  3. Improving Water and Oceans Governance
  4. Sustainable, Affordable and Clean Energy
  5. Sustainable Management of Chemicals and Waste

To achieve this, UNDP supports national partners to plan, access, deliver, diversify scale-up and sequence a variety of environmental vertical funds (GEF Trust Fund, Least Developed Countries Fund, Special Climate Change Fund; Adaptation Fund, Nagoya Protocol Implementation Fund), and combining this with other sources of public and private financing (domestic resources, carbon finance, bilateral vertical funds for global environment management, etc.).  This financing is used to develop capacity, remove policy and regulatory barriers, and expand/transform green markets in order to increase resilience, reduce poverty and inequalities and make green, low emission climate resilient development possible.

We also help countries reviewing and establishing policy and financing frameworks to more effectively access and use resources. For example, the Biodiversity Finance Initiative will help over 30 countries financing national biodiversity action plans while the UNDP-UNEP Poverty-Environment Initiative is designing investment strategies to address the poverty-environment nexus.

UNDP works to responsibly expand the frontier of economic opportunities generated by green markets as well the range of available financing solutions. These include green lending facilities and challenge funds for small and micro enterprises, the promotion of environmental and social certification for premium products and the development of innovative financial products, such as impact investment and social impact bonds. The Green Commodities Programme and the MDG Carbon assist countries in accessing these new sources.

UNDP has helped over 150 countries to access more than $2 billion from multilateral environmental vertical funds since 2010. Our key partners include:

  • Global environment trust funds such as the Global Environment Facility, The Adaptation Fund, the Least Developed Countries Fund, The Special Climate Change Fund, the Multi-Lateral Fund for the Implementation of the Montreal Protocol;
  • Multi donor trust funds managed by the UN system such as UN-REDD and the UNDP Thematic Trust Fund.

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