FEATURE: Aid to Trade and opportunities for climate compatible development
This event report first appeared on the Aldersgate Group website.
Andrew Raingold, Executive Director of the Aldersgate Group, explained the purpose of the event is to consider the role of business partnerships to deliver climate compatible development. The discussions will contribute to a report, being written by the Aldersgate Group with support from the Climate and Development Knowledge Network (CDKN), that will examine if a shift from aid to trade be an effective means to meet both climate and poverty reduction needs.
Baroness Northover, Lords Spokesperson for DfID and Liberal Democrat Peer, noted “I am extremely glad to see the Aldersgate Group, PwC and CDKN involved in this [agenda] and to see so many people here today.” Baroness Northover reported that climate change presents “opportunities as well as challenges” in developing countries, where GDP grew over 5% in 2012. “I believe that we must work in parallel with international negotiation to demonstrate that low carbon and climate resilient projects are viable and desirable”. It is in “our collective interests in terms of the greater stability worldwide” to implement long-term business strategies to relieve pressure on resources such as water, agriculture and energy. This in turn will “help deliver a more balanced and resilient global economy”. The Government has a “vital role to play” in “ensuring that international and national rules create incentives for private investors”. However, “we cannot mobilise the vast investment needed alone”, which means public-private partnerships are crucial. Baroness Northover highlighted the £2.9bn International Climate Fund as an example of where the Government is already engaged in partnership projects with businesses in developing countries. ”The public and private sectors must work together to help communities and countries of debt adapt to the impacts of climate change that we cannot avoid, support countries to prosper and grow in ways that reduce carbon emissions, and forge a stronger and more resilient climate resilient global economy … That is why working with the private sector is at the heart of the Government’s approach.”
Ari Huhtala, Director of Policy and Programmes at CDKN, affirmed the importance of the private sector in adaptation to climate change, which can provide “delivery climate solutions in a way that helps the poor”. Mr Huhtala argued that, traditionally, the poor in developing countries are the recipients of aid, but “the reality is that the poor are also actually buyers and sellers”. Therefore, “goods and services need to be offered to them in an affordable and accessible way”. Opening up such markets he said, would present the opportunity to “move from aid to trade”. Moreover, business partnerships are more sustainable in the long term than aid and allow for the “transfer of knowledge and skills” in delivering climate solutions.
Mike Rundle, Environment Sector Champion for the South West at UKTI, explained that encouraging companies to tap into markets overseas is “not about exporting, that is the old way. The new way is collaborative partnerships” in order to establish “mutually beneficial contracts”. He observed that “everything you do in your own businesses must reflect that commitment to working on climate change” and must be “embedded in business practices.” Companies in established economies are fortunate and can “afford the luxury of adopting those policies. Perhaps in emerging economies, where food and energy are scarce, it is not so easy to adopt them. But we can and we have an opportunity to show by example what needs to be done, rather than lecture and give money with conditions”. Mr Rundle concluded that “if a company is genuinely committed to tackling climate change and ensures those principles are followed through in overseas partnerships as they trade in other countries, that change will filter through”.
Nasreen Rashid, an expert in the insurance industry in Pakistan, discussed how recent political changes in response to climate change have made the country an optimal choice for investment. Ms Rashid reported that the effect of rising temperatures in Pakistan is higher than the global average, making it “an extremely climate sensitive country.” This places acute pressure on the country’s resources, particularly as “Pakistan is basically an agricultural economy, which contributes 21% to its GDP”. The high population growth rate is another major issue: “currently the population is around 190 million and it is expected to double by 2050, so feeding this bulging population will remain one of the biggest challenges for the Government.” Ms Rashid attested that investment in sectors such as insurance, would provide the best returns: “penetration in insurance is one of the lowest in the world and stands at only 0.8% of GDP”. Other key business investment opportunities exist in the energy, water and agricultural sectors. In this context Ms Rashid asserted that “aid is not the right way forward because it is not sustainable in the long run” and joint-venture partnerships, “especially when the legal and regulatory environment has created a level playing field for foreign investors,” would be the best approach.
James Wilde, Director of Insights at Carbon Trust, described “significant opportunity” in emerging markets, where the kind of programmes which we have been running in the UK are exactly what developing countries want to put in place. For example, the Carbon Trust designed Mexico’s energy efficiency policy in addition to “energy efficiency advice programmes” in order to improve the competitiveness of SMEs, “a rapidly growing part of the economy in Mexico”. In Brazil, work has been done to “identify which would be the most useful sectors for the UK to contribute to the Brazilian economy”, from solid waste to biofuels and buildings, from R&D through to design, and manufacturing or operation. Mr Wilde reported opportunities in organic PV solar, “where you can mass manufacture using quite standard printing technology, putting cells on plastic”. After launching a university competition, the Carbon Trust helped to commercialise the best solutions, one of which became a company called “Solar Press”. This new company “is good at developing the technology and the IP” but needs a partner in a developing country “who will actually unlock the market and deploy”. In March 2013, Solar Press signed a long term partnership agreement with a Brazilian company (KROENERT) to develop and sell turn-key manufacturing solutions for OPV modules.
Peter Curley, Corporate Relations Manager of The Climate Group, attested that the opportunity for businesses “is huge and is global”. Dr Curley reported that Climate Group is receiving “increasing enquiries from companies who are realising that climate change is going to affect their business and that it could be a great opportunity for them’’. Therefore, developing strong supporting business cases is key. Climate Group are working with partners, states and regions to develop partnerships with the UK and others to help develop solutions to the climate related challenges they face.
“There is an enormous gap in poor people’s ability to take the opportunities in their lives, including adaptation to climate change and the creation of a low carbon future”. CDKN is an alliance which presently operates 140 projects in 40 countries. The aim is to help reduce the “knowledge deficit” on tackling climate change, including through business partnerships. “We recognise that private sector funds are going to be critical and sustainable solutions will come from businesses taking up these challenges”.
Dan Hamza-Goodacre, CDKN, announced the planned publication of a report which will focus on “the opportunities for business to business partnerships on climate change solutions in developing countries.” “In parallel with the process of report writing, we are also looking at the best use of aid to catalyse private sector activity.” Mr Hamza-Goodacre announced that CDKN will make a call for funding applications for projects which “would meet our climate compatible development goals”. For example, “will they reduce emissions? Help developing countries adapt to climate change? Contribute towards energy efficiency, water or food security?” Mr Hamza-Goodacre suggested that proposals should consider how the solutions would continue beyond the initial funding, “so we can identify why it is a justifiable use of aid money and how business can carry on after the end of the project”. The priority for the business partnerships initiative will be to “put things onto a more sustainable footing so we can start to think creatively of making the move from aid to trade.”
Images courtesy of the Aldersgate Group