News from the Ministry of Foreign Affairs of Denmark

New tools aim to raise billions for climate and development


Developing countries need enormous sums for climate action, poverty alleviation and development. Therefore, we must employ new and innovative methods to massively scale up investments. Denmark is among the first countries contributing to two new financing tools that will raise billions for climate and development.

The World Bank and the international financial system need to raise far more financing for climate and development in developing countries. This is the message from the Danish Minister for Development Cooperation and Global Climate Policy, Dan Jørgensen, who is currently visiting Washington, D.C. to attend the Spring Meetings at the World Bank.

"Developing countries are far from having the funds they need to invest in climate and development. As a rich country, we have an obligation to help. But development assistance cannot stand alone. Therefore, the World Bank, Denmark and our partner countries are using new methods that can multiply the effect of every dollar provided as development assistance, including by attracting more private funds," says Dan Jørgensen.

Through hybrid capital in the World Bank and through a new Nordic-American climate financing alliance, Denmark will contribute to raising billions.

Danish support for World Bank reform
The World Bank is currently undergoing a reform (World Bank Evolution) to ensure that in the future, it will have even more funds to invest in green transition, education, health etc. in developing countries while achieving more and better results at country level. As part of the reform, the Bank has developed new innovative ways to raise financing. One of them is hybrid capital, where member states buy bonds issued by the bank thus raising additional capital to the bank. This is quicker than the bank’s usual ways of raising new financing. Today, Dan Jørgensen announced a planned Danish purchase of hybrid capital worth USD 57 million. Denmark is among the first countries to show financial support to this reform initiative.

"The World Bank is one of the most important global actors when it comes to raising financing to address the world's climate and development challenges. I am glad that this Danish contribution will support the World Bank reform, which should give the bank even greater impact and ensure better results in developing countries," says Dan Jørgensen.

Like all other capital in the World bank, hybrid capital can be used to mobilize additional funds through international capital markets. In this way, for every  dollar, up to 8 dollars will be invested in the world's developing countries. This means that the Danish contribution could end up mobilizing up to USD 456 million.

Nordic-American alliance mobilizes billions for climate investments in developing countries
The Nordic-American climate alliance ‘Investment Mobilization Collaboration Alliance’ (IMCA) can also mobilize enormous private capital for climate investments in developing countries with relatively few public funds. At a high-level meeting hosted by Dan Jørgensen in Washington today, Norway is welcomed as a new member of the alliance.

"Solving the global climate crisis will cost trillions. Without the necessary funds, even the most ambitious climate agreement will have limited effect. And we won't reach our goal with public funds alone. With this alliance we are using public funds to attract private money, multiplying the green impact of our investments," says Dan Jørgensen.

IMCA aims to gather catalytic public financing in the scale of millions of USD and through this attract billions of USD from institutional and other private investors towards investments in emerging and developing economies. Through IMCA's latest call for proposals, Denmark and Sweden, in collaboration with the Government of the United States, have made 100 million USD in credit risk guarantees available for private investments. The ambition is to mobilize private investments of more than 300 million USD for climate change adaptation in developing countries. Read more about IMCA here:

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