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Finance and climate action

Civil society action at COP24 in Katowice, Poland. November 2018. Photo: Tais Gadea Lara


Money, money, money: how to link finance and climate action?

From the money needed for the transition to the costs the impacts demand, climate change is also a story about finance. Here are recommendations on how to communicate this link constructively.

By Tais Gadea Lara, in collaboration with Kristian Elster

Few things interest readers more than issues that will affect their pockets, for better or worse. Can climate change be related to it?

Due to the August 2023 fires in Hawaii—intensified by climate change—each Hawaiian is estimated to have lost USD 4,161. For African countries to achieve their energy goals, USD 200 billion per year in investments will be necessary by 2030. Of all electricity sources, solar leads as the cheapest one worldwide in history. 

Here are some recommendations for your next stories at the intersection between climate and finance.

Ask about climate change in every money story, and vice versa

When governments, banks and multilateral organizations, and representatives of the private sector met in July 2023 to discuss how to modify the international financial architecture, they did so with a dual purpose: to help the developing world a) reduce its financial debts, b) develop climate policies. As France 24 explained in this story and DW did in this one, climate finance was not an isolated issue in the summit.

Every country’s budget contains money that is allocated—or not—to policies aimed at climate action. And this does not only mean the explicit policies to, for example, protect forests. It also implies delving into how much of the budget is allocated to subsidizing fossil fuels.

The links between finance and climate change should not only discuss the costs, but also the benefits that acting on climate change will bring for a region, and how it could be replicated in other places. The New Climate Economy report found that climate action can deliver at least USD 26 trillion in global economic benefits through 2030 compared to business as usual. Deep into how this translates into an increase of GDP, generation of new jobs, cost of living. 

Show how audiences might profit – or not

When a law was passed to promote the distribution of solar energy between citizens’ homes and the electrical grid in Argentina, the climate reason was possibly the least attractive to tell the story. The neighbors who had placed panels on their roofs highlighted the savings on their electricity bill by taking advantage of renewable energy and the habit changes they made to do so: not using the washing machine at night when energy was consumed from the network but doing it during the day to take advantage of the energy from the panels. That was the focus and explanatory depth of the story in the digital medium RedAcción that engaged readers.

It is important to make the benefits of climate action for a country visible, but it might be even more important to outline what’s in it for the audiences. These stories might even attract people who are not interested in climate change.

It is also relevant—and perhaps more challenging—to bring in the remoteness and complexity of macroeconomics.

  • If governments created a fund of money exclusively for losses and damages, how will this change the lofe of a Dominica resident the next time a hurricane passes through the island?
  • If there is a removalor reduction of subsidies for fossil fuels, how will it affect the electricity bill?
  • What kind of job opportunities will the transition create?Which professions will be needed most?
  • If air pollution is reduced, how much will health costs decrease?

Follow the commitments, follow the money

In 2014 Barack Obama committed to mobilize USD 3 billion to the Green Climate Fund. The mobilization was of USD 1 billion. Joe Biden’s administration mobilized USD 1 billion last year. USD 1 billion is still pending to complete the promise.
In the context of the pandemic, there was much talk about the need to “come out better” thinking about the planet.

The Climate Transparency Report showed that, in the recovery from the pandemic, the G20 countries allocated more money to policies more likely to harm the environment than to care for it.

It is very easy for decision makers to make promises, it is challenging for journalism to follow up on them.

Here are some questions that may be useful:

  • When will the money reach the community that needs it?
  • How will the money be delivered: in one sum, in parts, directly or through a financial institution?
  • What are the modalities for mobilization? Is a delivery like a grant the same as a loan that makes the country go into a new debt now under the label of climate action?
  • Which organization or initiative is tracking the path of the money? How independent are they of the actors involved?
  • Is this news or has the money been promised before in another setting?

Give dimension to big numbers

USD 44 trillion needs to be invested in the global energy transition by 2030. USD14.9 billion was the cost in damages by the flood in Pakistan in 2022. The climate finance flows need to increase by three to six times annually to meet the proclaimed needs.

Governments and banks might feel comfortable handling these numbers, but they are totally removed from the wallets of audiences. It’s important to go beyond the giant number.

These questions can help you in that purpose:

  • Is it a lot or little money for the issue at hand? The African Development Bank Group estimates that Africa will need to spend USD 3 trillion by 2030 to confront the worst of climate change. The GDP of all sub-Saharan Africa in 2022 was USD 2 trillion.How will the money be delivered: in one sum, in parts, directly or through a financial institution?
  • Is it what the community needs or is it what someone else decides to give? By the end of 2023, some developed countries have committed to mobilize USD 700 million for the loss and damage fund for developing countries. Some estimates indicate that USD 400 billion per year would be needed.
  • Can it be linked to another figure better known to audiences? For example: how many salaries of a football player are needed to transition to renewables in the country of your audience? Or following with the loss and damage fund: USD 700 million sounds like a lot, but it’s the same as the six highest paid football players earn in a year.

Delve into the opportunities and challenges of those who give and those who receive money

Climate negotiations between governments are negotiations about finance: the developed world must transfer money to the developing world to help it implement climate policies. The opportunities for stories about this are multiple.

  • Why is the country that committed to mobilizing money still not doing so: lack of political will, economic difficulty, scarcity of resources, geopolitical reasons?
  • What are the reasons why money is mobilized in the face of a pandemic or war, and not for climate action? What needs to be improved? Who has to act?
  • How prepared is the destination country to receive the money: does it have a concrete climate action project, who will benefit, how will transparency be guaranteed?
  • What do the actors involved understand by “climate action” in the financial flow? Will the money go to new wind farms or a natural gas project as a “transition resource”?