INTERVIEW
“IF YOUR FOCUS IS DEVELOPMENT, EVERYTHING NOW HAS TO BE CLIMATE-FOCUSED”
OPEC Fund Assistant Director-General Financial Operations Tarek Sherlala talks about the impact, implications and immediacy of the institution’s Climate Action Plan By Howard Hudson and Axel Reiserer, OPEC Fund
OPEC Fund Quarterly : How do you position our Climate Action Plan to stakeholders? Tarek Sherlala: Climate change has been impacting all countries, regions and sectors, so adopting a Climate Action Plan is a natural progression for us. Our development mandate requires us to respond to the enormous needs triggered by climate change and to also address the underlying issues that are holding countries back. Committing and allocating funds specifically to climate action is intrinsic to our focus on sustainable development and our engagement with partner countries. It is also very much in line with our member countries’ priorities. OFQ : How are we going to deliver on this commitment? TS: Our Climate Action Plan was designed based on the enormous needs communicated to us by our partner countries. We’re seeing more and more climate-based projects going into the pipeline of operations and are increasingly asked to provide support on energy transition. Our country managers have ongoing conversations with partner countries to better understand the particular issues they’re dealing with. We will provide more financing in support of climate mitigation, adaptation and resilience, and invest in transformational technologies that contribute to flattening
emission curves and improve across-the- board energy efficiencies. Our business model will incorporate joint investments with other multilateral development banks (MDBs) as well as standalone initiatives with national governments. OFQ : Are we considering a different approach or different criteria when it comes to assessing climate projects? TS: Development impact is front and center of everything we do. Environment and climate are of course increasingly key considerations in assessing development impact. Social impact, institutional capacity and governance are other key criteria. We rely heavily on our Environment, Social and Governance (ESG) Policy and Results Framework, and assess underlying needs to come up with the best financing solutions. Our solutions will continue to be tailored to the specific needs of our partner countries. OFQ : Moving from 20 to 40 percent in a rather short period of time is ambitious. How have we prepared for this challenge? TS: The business ecosystem has evolved considerably over the past years and climate financing is a cross-cutting theme that will involve all of us in everything we do. Climate financing opportunities already exist in abundance. As part of our Strategic Framework
2030 we have a clear growth agenda, and are already implementing important milestones such as an enhanced ESG policy and, most recently, a Development Effectiveness Framework. Our growth agenda, and the additional resources that will be made available in the coming years, will also allow us to sharpen our focus on climate action. Our Climate Action Plan sets out an equally clear roadmap to achieve the target of 40 percent climate financing by 2030, based on current investment trends. Helping vulnerable countries strengthen their climate policies and reinforce their Intended Nationally Determined Contributions and climate regulations is a particular focus. Promoting transformative climate investments to drive progress on adaptation and mitigation, as well as mobilizing private capital are equally important focus areas. OFQ : The Asian Development Bank (ADB) has developed the SDG Accelerator Bond as a de-risking tool. Is this something we also might consider? And more broadly, what can we learn from our partner institutions’ experiences? TS: We’ve been engaging with lots of different stakeholders as part of the launch of our Strategic Framework 2030 and are planning an SDG bond for our first issuance. Our plans are similar to those of other MDBs and we align
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