What is the role of Article 2.1c in advancing climate action?

The Centre for Science and Environment (CSE) and ODI are pleased to co-host an online consultation, ‘What is the role of Article 2.1c in advancing climate action?’

This half-day virtual-only event is aimed at bringing together a range of relevant stakeholders to deliberate on what it means for financial flows to be consistent with low-emission, climate resilient development pathways in accordance with Article 2.1c of the Paris Agreement. It aims to foster honest dialogue on how the world’s financial systems and global capital can truly be aligned with climate goals, whilst upholding the principle of equity, and fostering a fair green transition for all, especially in the Global South.

Article 2.1c

The Paris Agreement outlines three major long term goals for addressing the climate challenge. It emphasises the need to ensure planetary warming does not exceed 1.5°C, and that global temperature rise remains well below 2°C; it highlights the need to enhance global adaptation capacity for low emissions development without threatening food security; and, lastly, it provides what is called informally by some as the long-term finance goal, i.e., Article 2.1c of the Paris Agreement that aims at enhancing the implementation of the UNFCCC and respond to the global climate crisis, in the context of sustainable development, by “(c) Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

While the UNFCCC and the Paris Agreement both call upon developed countries to provide financial resources to developing countries for climate action, Article 2.1c is seen by some as the broader goal for making a shift in finance flows at a global and more systemic level. This is important given finance is a key enabler of climate action. For countries to implement ambitious climate pledges, access to finance from all actors needs to be improved greatly and this is facilitated (or hindered) by actors of the global financial system and international financial architecture and their actions, via rules, regulations, policies and more. As the provision of climate finance for developing countries so far has been inadequate, unevenly distributed and not necessarily reflective of the financing needs of vulnerable countries, complementary and more systems level action on financing could further facilitate the scaling and impact of climate finance provision.

However, the interpretation of climate-consistent finance flows within the climate negotiations are fraught. Positions of developed countries and developing countries can have stark divergences as to what is in scope in these discussions. Most significantly, the latter fear the use of Article 2.1c as a means to shirk responsibility of obligations of providing climate finance, even if the premise of making all finance climate-consistent is considered a worthy pursuit. Even in the real-world implementation of Article 2.1c by financial stakeholders such as pension funds, institutional investors, development aid agencies, asset managers and central banks, clarity and consensus on objective and equitable progress is not yet within reach. The UNFCCC itself does not provide any guardrails either, for what may not be considered climate-consistent financial flows or how various actors in the financial system may cooperate to see benefits. 

Online consultation by CSE and ODI - By invitation only

The Sharm el-Sheikh (SeS) dialogue on Article 2.1c and its complementarity with Article 9 has provided the much-needed space to deconstruct and assess some of the interpretations of this long-term finance goal and its interlinkages with other agenda items or multilateral institutions and processes. There is an urgent need to start to explore how to take Article 2.1c forward in the multilateral process, however, beyond dialogues.

Through this consultation, CSE and ODI are keen to provide space to foster nuanced discussions, precipitate key challenges and opportunities of climate-consistency of finance flows. It is hoped that participants may build on the consultation discourse at the second workshop of 2024 of the UNFCCC Sharm el-Sheikh Dialogue on Article 2.1c to be held on October 6-7, 2024.

The online consultation will deliberate on questions such as: 

• What are the key actions and actors in scope of Article 2.1c according to your understanding of operationalising the Article?
• What guardrails are needed to ensure that all countries take equitable action towards Article 2.1c and adverse consequences, strain on administrative capacities and undue conditionalities are not felt by States, particularly those in the Global South?
• What immediate next steps can be taken by actors, or early-agreements made between actors, in order to ensure the Article 2.1c agenda advances in the multilateral agenda? 

By bringing together climate finance negotiators, representatives of Ministries of Finance and Central Banks, regulators, private finance experts, academia and civil society organisations, the co-hosts hope to ensure that the discourse going forward is balanced, and accounts for the concerns and aspirations of a wide variety of stakeholders.

For queries, please contact:

Avantika Goswami
Programme Manager
Climate Change, CSE
avantika.goswami@cseindia.org

Charlene Watson,
Senior Research Associate
Climate and Sustainability, ODI
c.watson@odi.org.uk\