Under the Paris Agreement, countries around the world committed to make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. This commitment serves as a key driver for mobilising finance, supporting the urgent economic transformation needed to achieve the Paris Agreement objectives while pursuing sustainable development.
This report by the European Commission provides an overview of the current international context, as well as the policies and measures already in place in the EU to align finance flows with the Paris Agreement. The report demonstrates the EU’s commitment to fully implementing the Paris Agreement, including the goal embedded in its Article 2.1c on climate finance. It also highlights the challenges and opportunities faced by EU governments, businesses and financial institutions, while laying the foundation for a political reflection on how this critical effort could be further strengthened, both in the EU and globally.
To enhance the alignment of finance flows with global climate objectives and improve the mobilisation of climate finance, the EU engages with its international partners. For instance, together with Argentina, Canada, Chile, China, India, Kenya and Morocco (additional countries have now joined), the EU launched the International Platform on Sustainable Finance. The Platform aims to scale up the mobilisation of private capital for environmentally sustainable investment. In addition, the High-Level Expert Group (HLEG) on scaling up sustainable finance in low- and middle-income countries (LMICs) was set up in 2022 to identify challenges and opportunities related to sustainable finance in those countries. In April 2024, the HLEG prepared a report to provide recommendations on this topic to the European Commission.
Furthermore, the EU’s Sustainable Finance Framework supports the alignment of finance flows with the ambitious climate policies of the European Green Deal and the objectives set by the European Climate Law. The EU has also taken significant steps to make sure a significant part of the EU budget contributes to climate action.