New IKI standard indicators

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Pilot: IKI is using new standard indicators to follow the Paris Agreement for the mobilisation of private and public finance

Back in 2009, the world’s advanced economies signed the Copenhagen Accord, undertaking to collectively mobilise USD 100 billion annually by 2020 to support climate change mitigation and adaptation measures in developing and emerging countries. At the 2015 UN Climate Change Conference in Paris, this commitment was extended to 2025. A new, post-2025 climate finance target will be the subject of negotiations at COP26 in Glasgow.

However, the agreed sum of USD 100 million is not intended to be sourced exclusively from the public purse in sponsor countries.Instead, a variety of sources are intended as contributors, including bilateral and multilateral undertakings as well as private climate finance. Although reporting structures are already in place at international level both for financing from public sources as well as bilateral and multilateral ventures, a centralised, agreed survey format for private-sector capital is still lacking especially in the case of finance mobilised by public sources. 

The Paris Agreement and the Enhanced Transparency Framework have established a basis for the uniform reporting of mobilised finance at an international level. In Europe, providing details of mobilised capital forms part of reporting from 2020 and is therefore binding on EU member states such as Germany. The basis here is formed by legislation that transposes the Regulation ‘Governance System for the Energy Union and Climate Change Mitigation’.

Mobilisation and catalysation of private and public finance

Since the finance provided by International Climate Initiative (IKI) forms part of the official German climate financing commitments, IKI projects and their impact on the mobilisation of capital are relevant for reporting. In order to comply with EU and international obligations, IKI is therefore introducing the following new standard indicators: 

Volume of private and public finance mobilised for climate change and biodiversity purposes

The survey methodology is oriented on the OECD DAC methodologies for measuring the amounts mobilised from the private sector by official development finance interventions.

To obtain a comprehensive measurement of the impact of its portfolio for climate and biodiversity financing, IKI will also be collecting data on the indirect, catalytic leverage of private and public finance in the future. This includes IKI project activities such as capacity building or the development of a project pipeline, which lead to scenarios that involve investment by private and other public actors.

Volume of private and public finance catalysed for climate change and biodiversity purposes

Currently. there is no generally acknowledged method  for the measurement of catalysed investments. Decisions will therefore be made on a case-by-case basis here. 

The data surveyed by IKI will also encompass the funding area of biodiversity. 

The application of the new standard indicators will account for the two principles of additionality and attribution. Private and public capital will be accounted for only in situations where it was leveraged by IKI finance or measures. If several public donors have been involved in leveraging the investments, then IKI is entitled only to a proportional credit in accordance with OECD guidelines – so as to avoid double counting at international level.

Initially, IKI will be piloting the new standard indicators for selected projects. Following this, the results of the new indicators and their methodology will be evaluated, and application will then be extended to all IKI projects that seek to contribute to the mobilisation and catalysation of public and private finance.