According to the Intergovernmental Panel on Climate Change, the world is failing to meet the targets of the 2015 Paris Agreement on climate change, with global temperatures on a path towards increasing by more than 1.5°C above pre-industrial levels. The global economy must rapidly decarbonize and scale up support for climate change adaptation if the Paris Agreement’s targets are to be met and the worst effects of climate change averted.
The existing ‘international economic architecture’ – a patchwork of multilateral institutions, supervisory agencies and assorted forums – has been poorly equipped to deliver on this transition. It is fragmented, lacks effective regulatory frameworks for climate action, and relies on institutions that hitherto have not – at least until very recently – considered climate change as central to economic policy.
This paper catalogues current efforts to address climate change within multilateral economic and financial institutions and related organizations. It also proposes a minimum set of policy measures that need to be prioritized by such institutions to support climate change mitigation and adaptation. The proposals include expanding public climate finance via multilateral development banks, doing more to mobilize private investment, mainstreaming climate considerations across institutional operations, making climate disclosures mandatory, and addressing sovereign debt distress to unlock private climate finance.