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POLICY BRIEF: Private sector engagement in climate change action in Bangladesh: creating an enabling environment

This policy brief by Acclimatise, IIED and ICCCAD and with CDKN’s support examines the role of the private sector in climate compatible development (CCD) in Bangladesh. It is estimated that if prompt action is not taken at a global scale, the costs of climate change to Bangladesh could amount to an annual loss of 2% of GDP by 2050 and 9.4% of GDP by 2100[i]. Green Climate Fund (GCF), with USD 6.9 billion available for action on mitigation and adaptation (as of February 2016), offers opportunities for accessing finance for Bangladesh capitalizing on private sector.

This brief provides a rationale for the private sector’s engagement in CCD, an overview of its current involvement, the barriers that prevent further action and ways to overcome them.

Key messages for the public sector to create an enabling environment and ensure that public and private actions on CCD are complementary and effective include:

  • Given the high costs of mitigating and adapting to climate change and public budgetary constraints, engagement of the private sector is required to scale up existing investments in CCD initiatives
  • The private sector itself faces significant exposure to climate risk through its assets, operations and supply chains, and thus has considerable reason to invest in climate risk management
  • Developing new products and services to tackle climate change can enhance the competitiveness of the national economy[ii] at a global level. The private sector in Bangladesh has shown interest in accessing GCF to take advantage of opportunities for new and expanding markets
  • However, the private sector faces many barriers to capitalize on opportunities of climate change such as information gaps, shallow financial markets and lack of access to low cost finance, capacity constraints and policy/regulatory barriers

A variety of actions that the Government of Bangladesh can take to support engagement of the private sector in CCD are recommended

[i] Bangladesh Could See Climate Change Losses Reach Over 9% Of GDP – Report (2014) Available from: http://www.adb.org/news/bangladesh-could-see-climate-change-losses-reach-over-9-gdp-report

[ii] A Strategy to Engage the Private Sector in Climate Change Adaptation in Bangladesh, International Finance Corporation, 2010