On Urban Greening 2023 and the challenge of valuing nature

On Urban Greening 2023 and the challenge of valuing nature

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Michelle Maloney from Earth Laws Alliance of Australia delivers the keynote at Urban Greening 2023

Generations of capitalism, consumerism and environmental degradation will take a lot of undoing to move humanity back to operating within our ecological limits.

All those involved in the built environment have their work cut out for them. First, it was operational and embodied carbon. Then it was biodiversity, and soon it will be embodied water.

The Fifth Estate’s Urban Greening 2023 event on Thursday highlights the top thinkers, researchers and practitioners of biophilic design and integrating nature back into our homes, workplaces and places of leisure.

And what better way to kick off the day with appreciation of earth-centred governance with a keynote from Earth Laws Alliance of Australia national convenor, Michelle Maloney?

The earth jurisprudence expert framed the discussion with research from Will Steffen on the “Great Acceleration” – a 2015 study which visualises how the acceleration of industrial system development since the 1950s impacted our socio-economic and planetary wealth in 24 economic and earth system trends.

As the graphs of earth system trends in the image below indicate, increased economic output and development occurs in tandem with stratospheric rises of all indicators, from population to GDP, CO2 to ocean acidification, and tropical forest loss to coastal nitrogen levels.

These trends describe planet Earth’s transition from the Holocene, where all beings live in harmony with each other, to the Anthropocene, where human survival dominates that of all other living things.

The result is that humanity has created an “over-extractivist way of being influenced everything we all do,” Maloney said.

“And not one of us can change it on our own. But there’s an entire body of work that’s out there that’s challenging these systems. And great acceleration…was entirely manmade, entirely reliant on fossil fuels. And something that is entirely capable of being changed into something much better.”

Before launching into what most would consider radical ideas for changing our mindsets and improving our stewardship of the planet, Maloney refers to her work with leading Indigenous thinker Mary Graham to emphasise the importance of working with Indigenous governance systems and the laws of Country to build better futures.

Charts from Steffen et al’s 2015 research paper

“And that’s why we call ourselves Future Dreaming. Because yes, we’re a little bit out there. But is it weird or unusual to think that we should try to live within ecological limits?”

In her search for what she terms “alternative governance models”, Maloney was enchanted by Graham’s construct of “sacralised ecological custodianship” which has driven much of her focus as an environmental lawyer on “nature personhood” where human rights are conferred on things like mountains, rivers and the like.

The threads of how to modify our governance, financial and economic systems to build a better world carried over into a fascinating discussion featuring panellists from EY, KPMG, NSW government and GHD.

As KPMG head of social and sustainable finance Carolin Leeshaa pointed out: “We tend to think of nature as free, but it’s really not.”

We now realise that if we degrade nature through deforestation, water pollution and species loss, it carries significant material financial risks

The World Economic Forum, she said, estimates that nature directly contributes $US125 trillion to the world economy every year, and around 50 per cent of global GDP is either moderately or highly dependent on nature.

On the flip side, we now realise that if we degrade nature through deforestation, water pollution and species loss, it carries significant material financial risks.

She pointed to a growing realisation among corporates that preserving nature needs to be part of investment and strategic decision-making. “We’re bounded by nature because we simply cannot grow beyond our planetary boundaries.”

The need to incorporate nature into economic language and terminology gives Rasika Mohan market lead for sustainability, resilience and ESG for GHD Advisory, “a twinge of discomfort because it seems like this is the only way we can preserve and protect nature.”

Her most depressing example of this is that in land valuation, a patch of land is worth more if it is cleared than if it is rich in natural diversity, because cleared land is thought to be economically productive, “whereas land that has wilderness on it is considered to be a poor return.”

Mohan pointed to GHD’s recent work on the Fishermans Bend redevelopment in Melbourne where the company studied ways to implement biodiversity sensitive urban design to revegetate and rehabilitate former industrial spaces, and a rehabilitation at the aptly named Boggy Creek in Victoria’s Otway Ranges, a former sand quarry and creek. Finding quality data is a recurring issue, she added, even in the face of advancements such as digital twins and LIDAR (light detection and ranging).

Amy Croucher spoke about NSW Treasury’s Sustainability Advantage program that works with businesses to undertake a Nature Health Check and an action plan to implement change.

The program developed a natural capital accounting framework for the Wollondilly Shire Council, a peri-urban development area to the south of Sydney,  which [tp1] is home to critically endangered ecological communities, where the aim was to quantify the amount and type of native vegetation that might be impacted by development.

Emma Herd, partner with EY, likened the process of incorporating natural capital into existing economic and financial systems as a “translation exercise.. it’s about taking the large amorphous and turning it into things that business must and can be doing,­ and measurable impacts and outcomes from them.

“Getting business to do things is often giving them the language and the tools they need to make decisions and act as well. The challenge is, how do we do that in a way that doesn’t throw out all the new, by bringing it into the fold?”

Mohan said it wasn’t capitalism that felt uncomfortable, rather it was the fear of the unknown. “You can’t really predict the future, but you can only be resilient enough to be able to adapt to it and bounce back from it…so I think it’s a deeply uncomfortable space.”

We need to conserve 30 per cent of nature by 2030

Leeshaa described the signing of the Gulf Biodiversity Framework at COP 15 last year, which stipulates that 30 per cent of nature must be conserved by 2030, as a landmark development for the nature positive movement because it will translate into new national legislation, as is occurring with the federal government’s new Nature Repair Markets Bill.

Having the tools to assign a monetary value to nature is one thing, but it will all be for naught if consumers are unwilling to pay for it.

What the developers think

No one knows this more keenly than large-scale property developers. The Fifth Estate managing editor Tina Perinotto, moderated a panel that included Mulpha head of developments Tim Spencer, who observed a general flight to quality towards sustainable buildings but argued that to achieve better outcomes, it was necessary to push architects harder to allocate space for green infrastructure because they tended to want to maximise the amount of built form on a given site.

Melissa Schulz, general manager of sustainability at QIC described the fund manager’s master plan to develop green spaces around the Castle Towers shopping mall in Sydney’s northwest. “I think I’m speaking to the converted when I say that Western Sydney has a problem with the urban heat island effect. So [adding green infrastructure in that location is really, really important.” QIC is also pushing the green envelope at its office tower in Albert Street, Brisbane, one of the above-station developments as part of the Cross River Rail project.

Not to be outdone, Mirvac senior sustainability manager Andrew Scerri pointed to a master-planned community in Western Australia where the developer had managed to preserve 600 established trees. “And it’s actually a cost saving as well because transplanting them within the site was a lot cheaper than buying them.”

But the property developer‘s curse is that no matter how much you flex your green credentials and no matter how many trees you plant, someone will always point to flaws in your track record. Mirvac’s Scerri was painfully reminded of this when a Hornsby Shire councillor in the audience took the floor in a fiery exchange to ask how this could be reconciled with the company recently cutting down “hundreds of trees” at a recent project in her municipality.

With time running out before the Taskforce for Nature-Related Financial Disclosures releases its framework guidance in September, developers, fund managers and consultants alike are scrambling to find the data and tools they need to measure and manage the ecological footprint of their operations.

While it’s clear that some have a lot of catching up to do, it’s also apparent that even in the short space of a year since Urban Greening 2022, the industry’s approach to listening, understanding and working with nature has significantly evolved.

It feels like the “translation exercise” is well underway.

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What does ESG really mean for cities?

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What does ESG really mean for cities?

Can cities that prioritise ESG considerations create more sustainable and resilient communities that are better equipped to address challenges like climate change, social inequality and economic instability?

By Silvia Pellegrino

According to the World Economic Forum, cities not only house 60% of the world’s population but are responsible for over 70% of total emissions, meaning that they are at the heart of the green transition.

Green transition: ESG frameworks for cities need to go beyond visual indicators into tangible urban policy. (Photo by Owlie Productions/Shutterstock)

ESG approaches can guide cities towards a more efficient social and environmental strategy as well as help to reach the 17 United Nations Sustainable Development Goals since they make finding solutions to socio-environmental challenges easier.

But what does ESG mean for cities in a practical sense? And how can its principles be applied?

What is ESG?

ESG stands for environmental, social and governance framework. It refers to a set of standards that revolve around a company or city’s impact on the environment and its transparency around it.

An ESG strategy can be the key to proving that steps are being taken to become more environmentally and socially friendly. This type of framework can provide greater stability for overcoming and addressing today’s socio-environmental challenges.

This is particularly important because, as the latest UN Emissions Gap Report revealed, delays and policy failures mean that members are not on track to meet the Paris Agreement emissions reduction objectives to prevent global temperatures from exceeding 1.5°C.

What does an ESG approach mean for a city?

When a city includes an ESG-based approach, its government will focus on five primary factors:

  • Regulations: increased ESG regulation strengthens and speeds up the implementation of companies’ ESG strategies.
  • Strategic planning: city governments formulate strategic and overarching master plans for the city, following national objectives and directives.
  • Funding and financing: the efficient allocation of financial resources is a key step in an ESG-based approach since it promotes sustainable economic growth and addresses important urban issues.
  • Service provision: regional, local and city governments often set the rules for service providers in sectors responsible for emissions.
  • Monitoring: city governments have the power to monitor local service delivery, and to make sure that regulatory compliance is present.

Which cities are adopting ESG strategies?

Several cities around the world are already adopting ESG approaches, with the main objective being to reach a more sustainable and efficient society.

Here are a few examples of cities that have adopted ESG-friendly approaches.

Dubai

One of the main focal points for Dubai is service provision to help the city achieve net-zero targets in a timely manner.

Indeed, the Dubai Electricity and Water Authority (DEWA) announced the EV Green Charger initiative. This entails new charging solutions around the Emirate to not only augment the number of electric vehicles (EVs) in the city but also to procure EVs for the authorities.

By the end of 2022, the number of green chargers reached 350, with over 620 charging points across Dubai. In addition, the number of EVs went up to 15,100, while there now are around 13,500 hybrid vehicles. So far, 91% of this project has been completed, which is on track with the Dubai Carbon Abatement Strategy.

Oslo

As the European Green Capital in 2019, Oslo is also the most sustainable city on Arcadis’s Sustainable Cities Index 2022.

The Norwegian capital aims to reduce emissions by 95% by 2030, in comparison with 1990 levels. Today, it produces the cleanest and most renewable energy in Europe partly thanks to its investment in hydroelectricity.

When it comes to infrastructure, Oslo also had the first zero-emissions construction site in the world, which only used electric machinery. In addition, electric cars are entitled to cheaper parking in the city and there are various low-emissions zones that can only be accessed for free with hybrid or electric vehicles.

New York

The Big Apple’s regulations to reduce building-related emissions are part of the Climate Mobilisation Act, which has the objective of reducing emissions by 40% by 2030.

These new regulations, called Local Law 97, mostly cover large buildings like skyscrapers and their energy efficiency.

This law focuses on making New York City reach net zero by 2050. Buildings are responsible for about two-thirds of greenhouse gas emissions in the Big Apple, and this is one of the most ambitious plans for reducing emissions in the whole nation.

Under this plan, the majority of buildings over 25,000 square feet will have to undergo energy efficiency renovations and reduce their emissions by 2024, with tighter objectives in 2030. As a consequence, the emissions produced by the city’s largest buildings should be reduced by 40% by 2030 and 80% by 2050.

[Read more: Look to cities, but past their mayors, for new climate solutions]

 

 

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Are UN Sustainable Development Goal ETFs fit for purpose?

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ETF Stream‘s question: Are UN Sustainable Development Goal ETFs fit for purpose? It seems incongruous, but only the reply can justify such interrogation.   

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Are UN Sustainable Development Goal ETFs fit for purpose?

 

The goals look ready-made for thematic funds, but can they be properly aligned to an investment framework?

By Theo Andrew

The Sustainable Development Goals (SDG) continue to capture the imagination of ETF issuers but questions have been raised about the ability to properly align them to an investment framework.

Used by both active and passive funds, they were thrust into the spotlight again in January after DWS launched a seven-strong range of thematic ETFs targeting the SDGs it believes “present a growth story”.

Other ETF issuers have also launched products tracking SDGs, albeit not so inextricably linked to the goals, including the L&G Clean Water UCITS ETF (GLUG), the iShares Global Water UCITS ETF (IH20) and the BNP Paribas Easy ECPI Circular Economy Leaders UCITS ETF (REUSE).

The goals comprise 17 interlinked objectives, including no poverty, zero hunger and clean water and sanitation, which aim to serve as a blueprint to advance global progress for “peace and prosperity” for the planet.

However, while offering a strong narrative to pitch to investors, many have questioned the validity of using the SDGs as an investment framework.

Kenneth Lamont, senior fund analyst at Morningstar, said he understood some of the concerns around using SDGs as an investment framework but added it was part of a broader problem around impact investing with ETFs.

“The question mark hanging over SDGs is part of the broader question of whether you can use ETFs to invest impactfully. Investors need to be able to measure that impact, that is the goal of the investment,” he said.

“Generally, it is questionable whether investors can ever have a real impact by investing in listed stocks.”

Stuart Forbes, co-founder at Rize ETF, agreed, adding the SDGs were not designed for public or private market investment.

“The way the goals are measured is through a series of indicators such as decreasing deforestation and habitat loss. It would be almost impossible to assess a company’s contribution to forestation in Brazil or Indonesia,” he said.

“The further you go with SDGs from an investment and thematic perspective, it is just not possible to align.”

Forbes said Rize ETF explored the idea of launching products linked to the goals, looking at SDG alignment tools, but that they “just do not make any sense”.

“Looking at what the funds are holding, they are almost all developed market economies, they are not servicing an underserved region of the world or having a significant social impact,” he added.

For example, DWS uses MSCI’s SDG alignment tools designed to provide a “holistic view” of companies’ net contribution towards addressing each of the SDGs.

However, Lamont added the thematic element of the SDGs is what makes them attractive. For example, he noted GLUG’s thematic approach, investing in companies’ infrastructure and technology.

“I find GLUG interesting because it does focus a lot on water technology. It is a completely different set of stocks that are actually trying to solve the problem. It is much more of a thematic approach than the traditional water sector fund.”

DWS also includes a thematic element to its SDG range, with sustainable revenue accounting for 75% of the MSCI indices it tracks, while the remaining 25% will be calculated using forward-looking thematic metrics.

Speaking to ETF Stream ahead of the launch in January, Olivier Souliac, senior Xtrackers product specialist at DWS, said it chose not to do all 17 SDGs due to the inability to align them all within an investment framework.

“The reason we have a revenue-based approach is that some of the SDGs such as zero hunger and education can only really be filled by society and governments and are not themes in the sense of being growth stories,” he said.

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The breakthrough for Sustainable Development Goals in Africa

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An AllAfrica post about a United Nations Economic Commission for Africa (Addis Ababa) Press Release could not choose a better time for its posting.  In effect, the breakthrough for Sustainable Development Goals in Africa is as vital now as it has ever been. seem not to suffice for this universal mission.

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UN: New green industrial age can be the breakthrough for Sustainable Development Goals

NEW YORK, 5 April 2023  – Amid growing food and energy crises, an uncertain global economic outlook, and the escalating impacts of climate change, the UN today said that a sustainable industrial transformation is needed to close the widening development gap between countries, meet climate targets and achieve the Sustainable Development Goals.

The  2023 Financing for Sustainable Development Report: Financing Sustainable Transformations  says urgent, massive investments are needed to accelerate transformations including in electricity supply, industry, farming, transportation, and buildings.

“Without the means to invest in sustainable development and transform their energy and food systems, developing countries are falling even further behind,” United Nations Secretary-General António Guterres said in the foreword to the report. “A two-track world of haves and have-nots holds clear and obvious dangers for every country. We urgently need to rebuild global cooperation and find the solutions to our current crises in multilateral action.”

According to the report some of the necessary changes are already taking place. The energy crisis caused by the war in Ukraine has spurred investment in global energy transition, which skyrocketed in 2022 to a record $1.1 trillion. Energy transition investments surpassed fossil fuel system investments for the first time in 2022, but these are almost all in China and developed countries.

The  2023 Financing for Sustainable Development Report  finds that most developing countries do not have the resources for investment, unlike their developed counterparts. Climate change, Russia’s invasion of Ukraine, the COVID-19 pandemic, and debt payments up to two times higher than in 2019 have combined to put massive fiscal pressures on most developing countries. This limits their ability to invest in sustainable transformation.

In developed countries in 2020 and 2021, for example, post-pandemic recovery spending was $12,200 per capita. This was 30 times higher than for developing countries ($410), and 610 times higher than for least developed countries ($20).

“Without delivering a reformed international financial system while scaling up investments in the SDGs, we will not deliver on our shared commitment to the 2030 Agenda for Sustainable Development,” said United Nations Deputy Secretary-General Amina Mohammed. “The good news is that we know what to do and how to do it. From launching critical transformations in energy, food and education to ushering in a new green industrial and digital age—we all must quicken the pace and leave no one behind.”

The 2023 Financing for Sustainable Development Report notes that industrialization has historically been a vehicle of progress, leading to economic growth, job creation, technological advancement, and poverty reduction. The report calls for a new generation of sustainable industrial policies, underpinned by integrated national planning, to scale up investments and lay the foundation for the needed transformations. Many opportunities for inclusive growth exist in agroindustry, green energy, and manufacturing.

The recent rapid uptake in technology points to the possibilities for an equally rapid transition to sustainable industrialization and growth. Between 2021 and 2022, 338 million more people used the Internet regularly, an increase of approximately 38,600 additional people every hour. Furthermore, in regions with high-quality connected services, 44 per cent of all the companies are exporters, in contrast to only 19 per cent of firms where Internet services are weaker.

However, manufacturing capacity remains uneven. In least developed countries in Africa, manufacturing value added, instead of doubling as per the SDG target 9.2, fell from around 10 per cent of GDP in 2000 to 9 per cent in 2021. It will take targeted policies to build the domestic productive capabilities to achieve low-carbon transitions, create decent jobs, and boost economic growth, while ensuring gender equality.

To deliver the necessary resources for this transformation, the 2023 Financing for Sustainable Development Report calls for a combination of strengthening tax systems, enabling and catalyzing private investment, and scaling up of international public investment and development cooperation. Changes to the international financial architecture are also needed to raise sufficient resources.

The report notes that the international system is currently undergoing the biggest rethink across international finance, monetary, trade, and tax systems since the Bretton Woods Conference in 1944. As international institutions work to adapt to the rapidly evolving needs of countries, the report warns that if reforms are piecemeal, incomplete, or fail to take the SDGs into account, sustainable development will be unachievable.

A reformed, effective international financial architecture to deliver for sustainable transformation must include revised frameworks for:

  • International tax norms, including rules for taxing digitalized and globalized business that meet the needs of developing countries;
  • Policy and regulatory frameworks to better link private sector profitability with sustainability;
  • Evolving the scale and mission of the development bank system;
  • A loss and damage fund on climate change, which needs to be operationalized quickly;
  • Debt relief and major improvement to the international debt resolution architecture – given that 60 per cent of low-income countries are in or at risk of debt distress;
  • Multilateral trade rules to revise the approach to and resolve current tensions on green subsidies.

“We have the solutions to avoid a lasting sustainable development divide, and prevent a lost decade for development,” said UN Under Secretary-General Li Junhua, head of the Department of Economic and Social Affairs, which led the production of the inter-agency report. “We must find the political will to overcome the rising political tensions, splintering of inter-country alliances, and worrying trends towards nationalism and seize the moment now to urgently invest in our common future.”

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Sustainable development and climate change

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Sustainable development and climate change | By Naghmana A. Hashmi

Naghmana Alamgir Hashmi

SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE

SUSTAINABLE development has been defined by the World Business Council for Sustainable Development (WBCSD) as: “Forms of progress that meet the needs of the present without compromising the ability of future generations to meet their needs.” The WBCSD continues: “Given the scale of world poverty today, the challenge of meeting present needs is urgent. But we must look ahead and do our utmost to ensure that what we do today for our ever-growing population does not compromise the environmental, social and human needs of our descendants”.

Climate change and sustainable development both play a role in shaping the human and environmental factors of the world. On the one hand, climate change influences key natural and human living conditions and thereby also the basis for social and economic development, while on the other hand, society’s priorities on sustainable development influence both the carbon emissions that are causing climate change and the vulnerability. Multiple linkages therefore, exist between climate change and sustainable development. Although these are starting to receive attention, the focus has typically been on examining sustainable development through a climate change lens, rather than vice versa. There has been little systematic examination of how these linkages may be fostered in practice. Governments, companies and members of the public can contribute to environmental sustainability.

The link between climate change and sustainable development stems from the fact that climate change is a constraint to development and sustainable development is a key to capacities for mitigation and adaptation. Maintaining environmental quality is essential for sustainable development. There is a dual relationship between sustainable development and climate change.       In 1987, the authors of “Our common future” argued that unless the world embraced and operationalized sustainable development, it would risk being overwhelmed by a series of interlocking crises related to population growth, urbanization, poverty and environmental degradation. Since then, many authors have argued that the world is on a worst case scenario trajectory. Since 1987, climate change has added a new stressor to the mix while shortening the time frame for transformation. In the context of accelerating change and converging stresses is the concept of sustainable development has become more compelling today.

There is an urgent need to reconcile development and climate change. The key to achieving this is to approach the problem from the development perspective, since that is where in most countries the priority lies. What is required therefore, is an integrated approach that recognizes the nexus between sustainable development and climate change particularly in the developing countries.

The focus should be on the main national development priorities, such as poverty reduction, disaster reduction, rural development, energy supply and transportation. Climate change and sustainable development should be addressed together as there are strong linkages between the two. These linkages provide for integrated policy development and the necessity to consider the risk of trade-offs. Integration may not only provide new opportunities, but also may be a prerequisite for successfully addressing both issues. Since the feasibility of stabilizing greenhouse gas concentrations is dependent on general socio-economic development paths, climate policy responses should be fully placed in the larger context of technological and socio-economic policy development rather than be viewed as an add-on to those broader policies.

Climate change should feature prominently within the environmental or economic policy agendas of developing countries as evidence shows that some of the most adverse effects of climate change is in developing countries, where populations are most vulnerable and least likely to easily adapt to climate change and that climate change will affect the potential for development in these countries. This was most dramatically, evident from the devastating floods that inundated one-third of Pakistan in 2022 bringing it to the point of economic collapse.

Some synergies already exist between climate change policies and the sustainable development agenda in developing countries, such as energy efficiency, renewable energy, transport and sustainable land-use policies. Despite limited attention from policy-makers to date, climate change policies could have significant ancillary benefits for the local environment. The reverse is also true as local and national policies to address congestion, air quality, access to energy services and energy diversity may also limit harmful emissions. Nevertheless there could be significant trade-offs associated with deeper levels of mitigation in some countries, for example, where developing countries are dependent on indigenous coal and may be required to switch to cleaner yet more expensive fuels to limit emissions.

The distributional impacts of such policies are an important determinant of their feasibility and need to be considered up-front. International community will need to recognize the diverse situations of developing countries with respect to their level of economic development, their vulnerability to climate change and their ability to adapt or mitigate. Recognition of how climate change is likely to influence other development priorities may be a first step toward building cost-effective strategies and integrated, institutional capacity in developing countries to respond to climate change.

Although climate change seems marginal compared to the pressing issues of poverty alleviation and economic development, it is becoming clear that the realization of development goals may be hampered by climate change. However, development can be shaped in such a way as to achieve its goals and at the same time reduce vulnerability to climate change, thereby facilitating sustainable development that realizes economic, social, local and global environmental goals. Climate change discussions should focus on development strategies with ancillary climate benefits and increase the capability of developing countries to implement these.

Climate policies can be more effective when consistently embedded within broader strategies designed to make national and regional development paths more sustainable. This occurs because the impact of climate variability and change, climate policy responses and associated socio-economic development will affect the ability of countries to achieve sustainable development goals. Conversely, the pursuit of those goals will in turn affect the opportunities for and success of, climate policies.

Recognizing the dual relationship between Sustainable Development and climate change points to a need for the exploration of policies that jointly address Sustainable Development and climate change. There is a need for the policymakers and development partners to adopt an effective approach to growth and development, one that eschews the damaging ways of the past, considers interlinkages among people, the planet and the global economy in policy making and seizes the opportunities new technological possibilities offer to promote strong, resilient, inclusive and sustainable growth.

Governments promote green technological innovation and diffusion, with support from the development partner community and provide a clear sense of direction and policy certainty to encourage firms to redirect innovation toward green technologies. While policy approaches to support climate policies and the energy transition may differ across countries, it is important to avoid policies, which result in lower trade in green goods and services, lower technological transfers and an inefficient allocation of resources. Development partners could also explore multicounty mechanisms to support technological breakthroughs in clean technologies for their diffusion to emerging markets and developing economies.

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