The credible Paris-aligned transformation of the manufacturing industry 's transformation aligned with a net-zero path will be critical in achieving global net-zero targets since the sector is a major source of total global CO2 emissions. Significant gaps and uncertainties remain about how governments and industry actors will deploy low-carbon technology options, as well as which enabling conditions, financing sources and instruments can unlock the needed investments, especially in emerging and developing economies. As one key solution, transition finance aims to unlock capital for emission-intensive industries, like manufacturing, to bring investments onto a Paris-aligned pathway. However, the transition finance market remains nascent and different approaches continue to bear risks of greenwashing and carbon lock-in, thus compromising the environmental credibility of this market. Building on the forthcoming OECD report ‘Mechanisms to prevent carbon lock-in in transition finance’, this plenary will discuss how transition finance can be credibly scaled up to mobilise investment for low-carbon technology options in high-emitting industries like manufacturing in developing countries, while avoiding risk of carbon lock-in.

Large-scale mobilisation of finance for mitigation and adaptation investments is central to meeting climate and development goals, but progress is far too slow. The Sharm El Sheikh Guidebook For Just Financing by the Egyptian COP27 Presidency sets out recommendations for different stakeholders – governments, donors and development banks, and private sector – with the aim of turning commitments into implementable climate-related projects and of capturing opportunities for climate and development investments. The panel will discuss the state of progress on mobilising finance, remaining bottlenecks, as well as key priorities and opportunities to shift the needle on mobilisation, and advance climate action ahead of COP28.

SMEs are increasingly affected by emerging sustainability reporting requirements. Not only are SME suppliers of large enterprises being called upon to provide data on their sustainability performance or they risk losing contracts with reporting entities, but a large share of the SME population is also at risk of losing access to external financing from providers that are now required to report on the sustainability of their financed portfolios. Yet few SMEs currently measure and report on their sustainability performance, and most SMEs have limited resources and capacities to undertake such reporting. The risk is amplified for SMEs in high emitting and hard-to-abate sectors and regions as financial institutions seek to steer their financing and investment portfolios toward green and sustainable investments and sectors. This session will explore these emerging challenges and the role that different actors - at the national and regional level - can play in supporting SMEs in this changing financing ecosystem.

Climate change mitigation scenarios play a crucial role in guiding the financial sector’s target setting, transition planning and Paris alignment assessments. However, assumptions and uncertainties associated with such scenarios are not necessarily well understood. Building on the findings of novel OECD analysis, this session will discuss the consistency with the Paris Agreement of scenarios currently used in finance, their scope and granularity, as well as underlying assumptions and limitations. The session will inform climate policy makers, climate scenario developers, climate-related assessment methodology providers and financial market participants on how they each and collectively may contribute to improved design and use of climate change mitigation scenarios.

Recent momentum behind commitments made by financial institutions on net zero GHG emissions is encouraging. However, turning increased ambition into outcomes that contribute to a net zero transition by 2050 remains a major challenge. There is a need for a range of robust and comparable metrics and information to better understand, identify and assess the climate change mitigation impact of assets and activities in financial markets, as well as facilitate capital allocation towards activities that support a net zero transition. This session will bring together policy makers market participants and stakeholders to discuss progress on consistent metrics to monitor financial institutions’ net zero commitments and help facilitate the reallocation of capital towards financing the transition to low-GHG emissions alternatives. This session will build on the earlier break-out session on “The use of climate mitigation scenarios for financial sector target setting, transition planning and alignment assessment”, as well as on the plenary “Accelerating the climate transition of emission-intensive sectors”.

Materialising hydrogen’s potential for the net-zero economy requires a significant scale up in investments across the value chain, ranging from dedicated renewable power to transport and storage infrastructure. A large share of the required global average annual investments of up to USD 1 trillion per year for hydrogen development will be needed in emerging and developing economies. Realising this will require fostering an enabling environment for hydrogen through national roadmaps, regulatory frameworks, and policies. Enabling conditions will need to be complemented with innovative financing since hydrogen is still at its early stages of development and poses high risks to project developers and financiers. Building on OECD work on green hydrogen, this session will focus on effective financing solutions and identify blind spots for accelerating the adoption of green hydrogen in emerging and developing economies.

To keep global warming to no more than 1.5°C – as called for in the Paris Agreement – emissions need to be reduced by 45% by 2030 and reach net zero by 2050. Doing so will require transformational breakthroughs and dramatic upscaling in mobilising public-private finance and investment to developing countries. It requires actions, partnerships and systemic change on multiple levels. At country level, a holistic, whole-of-government, demand-and-supply-focused approach is needed to create and ensure an attractive investment climate to support a robust pipeline of bankable projects. All country- and regional-level investment programmes and country/sector platforms can benefit from the direct involvement of (i) investors, banks, related networks and (ii) public financial institutions (PFIs) (MDBs, IFIs, bilateral donors, NDBs, public green investment banks), with iii) investee country governments having clear ownership. This inclusive approach can enable, across a range of platforms, the development and implementation of targeted, effective blended finance, and a clear focus on investable opportunities. What is needed from MDBs, donors and public financial institutions to achieve a 1.5 degree global warming target? What changes are required for an effective green finance and investment ecosystem?