Why in news?
Countries meeting under the United Nations Framework Convention on Climate Change (UNFCCC) launched a new work programme called the Sharm el‑Sheikh Dialogue to make financial flows consistent with the climate goals of the Paris Agreement. The programme will convene over the next few years to discuss how banks, investors and governments can fund a low‑carbon, climate‑resilient future.
Background
Article 2.1(c) of the 2015 Paris Agreement commits parties to “make financial flows consistent with a pathway towards low‑greenhouse‑gas emissions and climate‑resilient development.” However, global investment still favours fossil fuel extraction and infrastructure. At the UNFCCC conference held in Sharm el‑Sheikh (Egypt) in 2022, parties proposed a structured dialogue to bridge this gap.
Key features of the dialogue
- Workshops and expert meetings: The programme will organise technical workshops that bring together policy makers, central bankers, investors, insurers and civil society to identify obstacles to aligning finance with climate goals.
- Equity and just transitions: Discussions will highlight that shifting away from coal and oil must protect workers and vulnerable communities. Developing countries will emphasise the need for affordable finance.
- Public‑private coordination: Governments will explore how regulations, tax incentives and disclosure rules can steer private capital into renewable energy, sustainable agriculture and resilient infrastructure.
- Transparency: Participants will track progress in shifting investments and report on their actions during the global stocktake in 2025.
Why it matters
Climate goals cannot be met unless trillions of dollars in public and private money are redirected away from high‑carbon activities. The Sharm el‑Sheikh Dialogue provides a forum to build consensus on definitions, standards and pathways for green finance. It recognises that finance is not only about numbers but also about justice and development. Success will depend on whether rich countries honour their pledges and whether financial institutions adopt responsible practices.
