Developing countries need private sector help. They can’t fight the climate crisis on their own

As Cop28 gets under way, it is vital that corporations and richer nations invest in the global south

Without urgent action to bolster green jobs in developing economies, the collective action needed to win the fight against climate change will remain elusive. Developing nations face a number of socioeconomic challenges, forcing them to tighten spending. More people worldwide are living in hunger, and 2 billion people lack access to safely managed drinking water at home. More than 60% of low-income countries are in, or at high risk of, debt distress, while access to capital is limited and the cost of borrowing prohibitive. This leaves minimal room for the debt creation and spending needed to fund climate action.

Green industrialisation presents an opportunity for developing nations to achieve socioeconomic transformation by combining environmental stewardship and economic progress. It offers a pathway for sustainable and inclusive growth and can address these structural challenges by improving access to energy, industrialisation and diversification, and growing employment.

We have witnessed how climate policies such as the Inflation Reduction Act in the US and the European Net-Zero Industry Act have unlocked capital to power their green industrialisation agenda. In its first year, the Inflation Reduction Act is unlocking capital, reducing emissions, creating new jobs and transforming the American economy. In the United Arab Emirates, we have also launched the Green Economy for Sustainable Development initiative, which has yielded promising results.

Powerful as these national initiatives are, none of these programmes will have the global impact needed to unlock sufficient funding and reduce emissions at the rate required. The world will not avoid the dangerous impacts of climate change without a significant increase in investment in developing countries. The Songwe Stern report calls for an investment of more than $2.4tn a year, including a trillion in external finance for low-income and emerging markets in the global south.

While we have witnessed private and global capital markets increase investment to emerging and low-income countries over the last 20 years, these resources have not directly supported the green industrialisation revolution. Investment must drive a new form of green economic growth and contribute to a green transition, powering the development of new industries, manufacturing and jobs.

Take electrification, for example. Under a scenario of net zero by 2050, there will be continued demand for critical minerals such as copper, nickel and lithium, which presents a unique opportunity for mineral-rich developing countries. Africa today has 40% of the critical minerals needed for the energy transition and so green industrialisation can contribute to long-term economic development, green jobs, and facilitate trade and investment.

As world leaders, industry and civil society meet in Dubai for Cop28, the agenda must address the private sector’s support for green industrialisation and focus on three key areas.

First, developing countries should take tangible steps to design comprehensive green growth strategies that build on their comparative advantages. These must place human development and inclusivity at their heart, ensuring that these strategies have attractive and implementable policies that address the energy transition, while also safeguarding the livelihoods of those working in manufacturing and all other labour-creating sectors.

Second, unlocking private sector capital by creating project appropriate financial instruments, guarantees, de-risking instruments and working with philanthropy to identify and support investments is crucial. Supplementing these investments, through offering credit enhancements, blended finance or guarantees can also help attract the equity financing needed, and would support innovation, technology transfer and opportunity creation.

Last, reforming global financial architecture to include access to more sustainable finance is critical. Pension and sovereign wealth funds in emerging markets are already providing long-term capital for investment, but more is needed. Credit rating agencies, and other key organisations such as the Basel Committee on Banking Supervision, which provides a global forum to work towards common banking standards and approaches, and the Glasgow Financial Alliance for Net Zero, which unites businesses to work together on decarbonisation efforts, must all work with financial institutions to support a more investor-friendly regulatory framework. This will enable transformational projects to be launched and attract private investment.

It will also ensure that countries do not confront the climate battle encumbered by debt, in essence with one hand tied behind their backs. Making adequate levels of financing available to all by releasing the full force of the private sector will re-ignite collective global green industrialisation and support, and accelerate the drive to net zero and create jobs and prosperity.

This is the existential battle of our generation. The challenge is too big and too important to fail.

The world must deploy all the tools at its disposal to fight for our shared planet. The question is whether leaders will have the foresight to make the investments before it’s too late.

• Sultan Ahmed Al Jaber is president of the Cop28 United Nations climate change conference

• William Ruto is president of Kenya

Photograph: Ali Haider/EPA