Aligning finance with climate policy goals is crucial for achieving net-zero greenhouse gas emissions and resilience to climate change, as called for by Article 2.1c of the Paris Agreement. Evidence-based policy making and investment decisions towards such alignment need to be informed by robust assessments. To support such efforts, this inaugural OECD Review on Aligning Finance with Climate Goals brings together best-available evidence on three core questions: (i) How is climate alignment of finance assessed? (ii) What do we know about current finance flows and stocks? (iii) What evidence exists on the role of financial sector policies and actions? The report identifies actions policymakers and financial sector stakeholders can take to improve the evidence base and better align finance with climate goals. It further sets out good practices to prevent greenwashing and inaccurate claims of climate alignment.

Three organizations teamed up to provide financing for suppliers of energy and chemical company Aramco by establishing what they said is one of the world’s largest supply chain financing programs.

Aramco, Taulia and the Saudi Industrial Development Fund (SIDF) announced their signing of agreements to establish the supply chain financing solution in a Tuesday (Oct. 29) press release.

“Together with our partners, we are introducing this FinTech solution for our suppliers, offering them access to a unique and competitive financing opportunity,” Ziad T. Al-Murshed, chief financial officer and executive vice president of finance at Aramco, said in the release. “This platform also provides an investment opportunity for banks to participate as finance providers, enhancing the solution’s scale and viability.”

The new solution aims to unlock billions of Saudi Riyals in liquidity; provide Aramco’s suppliers with an alternative and competitive source of financing; enhance their liquidity and cash forecasting accuracy; and reinforce Aramco’s supply chain resilience, according to the release.

Cedric Bru, CEO at Taulia, which is an SAP company and a FinTech provider of working capital management solutions, said in the release that the solution will enable thousands of companies to access early payments.

“Our goal is to ensure that cash flows fast and easily towards suppliers,” Bru said. “When done at scale, it creates opportunities for growth and investment for these businesses. We are tremendously excited and proud to make that a reality for Aramco and its trading partners.”

It was reported in April 2021 that Aramco was exploring a supply chain finance initiative that would finance billions of dollars per month in payments to suppliers. The report said the firm had more than 10,000 suppliers in its home country of Saudi Arabia.

Energy company Eni launched a supply chain finance program designed to incentivize sustainable development in March 2023.

The company’s Sustainable Supply Chain Finance Program is focused on the energy supply chain and allows Eni’s suppliers to request advance payment of invoices if they have committed to sustainable development.

In an earlier, separate collaboration, Taulia teamed up with Visa in March to enable virtual payment credentials to work natively across SAP business applications.

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The Finance Ministers and Central Bank Governors of the G20 held their final meeting of the year on October 23–24, 2024, during the Annual Meetings of the International Monetary Fund (IMF) and World Bank Group. Their final meeting formed part of the run-up to COP29 in Baku – where governments will negotiate a New Collective Quantified Goal (NCQG) on climate finance – and the G20 Summit in Rio de Janeiro.  

A suite of documents issued after the meeting included several notable developments, summarised below. This builds on E3G’s previous blog outlining multilateral development bank (MDB) outcomes from last week’s Annual Meetings. [The Finance Ministers’ Communiqué and its Annex are here, while the Ministerial Statement and Outcome Document from the Task Force for the Global Mobilization Against Climate Change (TF CLIMA), a collaboration between Finance and Climate Ministers, are here.] 

International financial architecture (IFA) reform 

The G20 Finance Ministers made substantial progress on reforming international financial architecture across the board, on topics ranging from multilateral development banks (MDBs) to the IMF to financial regulation. The Communiqué covers a wide range of climate-related topics, including recognising the macroeconomic and distributional challenges of the climate transition and proposing various forward actions.  

MDB resources and strategies 

The G20 Finance Ministers committed to reviewing MDB resources and strategies, and to measuring progress against a new MDBs Roadmap. The Communiqué tasks the IFA working group with establishing a monitoring and reporting process to ensure that progress is made.  

The G20 Ministers called for deeper reforms to the Capital Adequacy Framework (CAF) and opened the door in principle to new capitalisation for MDBs. However, they stopped short of making concrete commitments for new financing and did not adopt the aim of tripling MDB lending by 2030, a recommendation previously made by the G20 Independent Expert Group. Taking that further step, together with improving lending terms, would significantly enhance trust in the G20 among developing countries. 

Fiscal space and transition financing 

Creating additional fiscal space to finance the transition to a low-carbon economy in Emerging Markets and Developing Economies (EMDEs) requires ongoing commitment from leaders with support from Finance Ministers. The Finance Ministers’ Communiqué includes actions to address debt vulnerabilities, which may make it difficult for countries to take on additional lending for investment in the climate transition and other development goals. Streamlining innovative debt solutions, such as debt-for-climate swaps or climate-resilient debt clauses, may be an option to help free up fiscal space for EMDEs.  

The Communiqué also discussed fostering international tax cooperation, including dialogue on taxing ultra-high-net-worth individuals.  

We can expect to see more on both themes in 2025, as early signals suggest that South Africa will prioritise them during its upcoming G20 Presidency. 

Financial frameworks and transition planning 

The overall message from TF CLIMA was that a financial framework which combines global financial stability with increased capital flows from developed to developing countries is feasible.  

Building on this overall approach, the TF CLIMA Outcome Document and accompanying Ministerial Statement, together with the report of the Sustainable Finance Working Group, provide overarching principles for: 

1. Transition planning at the national level.
2. Design of country platforms to co-ordinate investment in national transition plans.
3. Private sector transition planning, building on the work of standards and frameworks created by ISSB, GFANZ, and TPT. 

Looking ahead 

The G20 Finance Ministers’ final publications for 2024, including the TF CLIMA outputs, demonstrate that climate change is increasingly viewed as a macroeconomic issue. It is also clear that Finance Ministers recognise this and are working to implement the tools at their disposal.  

However, with negotiations on a New Collective Quantified Goal on finance in Baku planned in November alongside the G20 Leaders meeting in Rio, a critical question remains: will this momentum be rapid enough to enable agreement on a new finance goal in Baku this year and to provide a springboard for key reform steps to be agreed by Leaders as they tee up next year’s agenda? Ensuring that the G20’s answer is “yes” will be a key task for South Africa and Brazil as they work together during their upcoming G20 and COP30 Presidencies to take this agenda further and faster in 2025.