Coffee with: Jamie Fergusson, IFC’S Global Director for Climate Business: Fergusson (LinkedIn) is responsible for IFC’s climate strategy and policies and the delivery of its ambitious targets to make all investments Paris Aligned and 40% of its investment climate positive. IFC committed a record USD 14.4 bn in climate finance in FY23, representing 46% of all long-term finance investments. Last July, IFC began aligning all investment operations to the Paris Agreement.

We had a brief chat with Fergusson on the opening day of COP28 to discuss the significance of this year’s summit, where the world stands on issues of urgency, what areas IFC will be focusing on, and what needs to be accomplished to achieve the targets set out in the 2015 Paris Agreement.

Edited and condensed excerpts of our conversation follow.

WHERE THE IFC STANDS TODAY-

As the only private sector focused development institution, we’re tackling three dilemmas. One is building a project pipeline — there’s not enough investable opportunities in emerging markets. The next area is making it affordable and mobilizing in emerging markets by bringing in new technologies where they may not be affordable yet and derisking for investors with blended capital, and the third area is mobilizing that capital.

We’re doing that at scale. We have a USD 32 bn pipeline of new projects under development and over the last decade, IFC has invested in 22 GW of renewables. IFC’s role across markets is to do first-of-kind projects — including solar projects in Egypt and wind projects in Jordan — and then scale from multiple small investments and larger wholesale projects.In the last year we invested in the Abydos solar and the Amunet wind projects with UAE’s Amea Power with a USD 770 mn investment.

WHAT’S TOP OF THE AGENDA AT COP28-

This summit is important because we’re at the midway point between the 2015 Paris Agreement and the targets countries undertook under the Paris Agreement for 2030. The focus of this COP is a global stocktake — which should be a shock to everyone’s system — as it is the global report card telling us that we’re off track. The outlook by the end of the century has moved from about 3°C to 2.5°C change, but that’s still way off where we need to be.

For IFC, heading into COP, water is at the top of our agenda and decarbonizing hard-to-abate industries. We’ve got to move to the hard middle — people are stopping financing coal, people are doing more of the green bonds and renewable energy, but there’s the whole of the rest of the economy.

WHAT IS NEEDED-

We need increased pricing on carbon, increased renewable energy procurement, and increased blended finance to get the most from the private sector to move to scale. We need to scale the urgency of action to achieve a 43% reduction in GHGs by 2030 which requires a complete rewiring of the global economy and approximately USD 2. 4 tn of investment per year, specifically in emerging markets. 80% of that has to come from the private sector and we need a tripling of annual investments in renewable energy. At the moment, only 20% of that is in emerging markets.

Adaptation investment requires approximate USD 400 bn a year, which is a sort of 5-10x increase from current levels. The IFC’s strategy in this context is to catalyze and accelerate the transition to a low carbon, resilient, inclusive growth in emerging markets.

Since the Paris agreement, IFC has increased our climate finance threefold and increased our climate mobilization of other private capital six fold. Last year, we committed just shy of USD 15 bn of climate finance accounting for 46% of our own business.

GREEN BONDS-

IFC acts as an issuer and standard setter, but also as a buyer. Last year, we purchased between USD 4.6 bn in labeled bonds across markets. We’ve played a role as an early issuer with IFC’s own capital, issuing USD 13 bn in green bonds over the years to move the market out. We’ve also acted as a capacity builder, training over 285 financial intermediaries in 70 different countries on how to issue green bonds, providing guidance on what green and blue bonds, and in general what biodiversity finance looks like to regulators.

The labeled bond market in emerging markets is now over USD 300 bn per year and last year we helped The Jordan Kuwait Bank issue Jordan’s first USD 50 mn green bond and we’re also active in Egypt and Morocco.

GREEN BUILDINGS-

IFC has committed nearly USD 12 bn of our own capital into the Edge certification program for green buildings, replicated by a third of a further USD 5 bn in private investment. We find this to be vital, because the certification requires a 20% reduction in energy use, a 20% reduction in water use, and 20% reduction in the embodied carbon in the building itself. IFC has a partnership with the Amman municipality in Jordan to drive green buildings growth with Edge, and on a wider scope we’ve built capacity across markets and provided financing to banks for green mortgages and lending and financing directly to real estate developers. As a result, 60 mn square meters across 96 countries is currently certified to be as green as Edge requires. About USD 1.5 tn is needed to invest in green buildings in the next decade.

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