ODI Logo ODI

Trending

Our Programmes

Search

Newsletter

Sign up to our newsletter.

Follow ODI

From G20 to COP30: Can Article 2.1(c) of the Paris Agreement work for climate resilient development in food systems?

Expert comment

Written by Nathaniel Mason, Bertha Argueta

Image credit:Viet Nam cabbage farmer. Tony Pham

The third long-term goal of the Paris Agreement, Article 2.1(c), calls for “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”. Implementing Article 2.1(c) could transform finance, from the policies and spending of the largest governments to corporations’ and individuals’ investment options. Yet exactly what this involves continues to be debated.

Developing country Parties in particular have expressed concerns that developed countries are pushing top-down interpretations of Article 2.1(c), even while being slow to implement commitments to provide climate finance. Moreover, most efforts to implement Article 2.1(c) focus on shifting finance towards low-emissions investments, and away from fossil fuels.

But our previous research showed that if implementation of 2.1(c) is to work in line with the interests of developing countries, equity must be at its heart, with a much greater focus on climate resilient development and, within this, the adaptation and sustainable development aspects. UNFCCC negotiations on how to implement Article 2.1(c) have yet to start, with dialogues on 2.1(c) and its relationship with the Paris Agreement’s Article 9 on climate finance running since 2023. Held in Bonn this week, the latest round finally engages with the issue of climate resilience.

To ensure Article 2.1(c) supports climate resilient development, we need to consider the particular financing challenges and opportunities of different sectors. That’s why we’ve delved further into the issues in the context of small-scale agrifood systems, which can face multiple climate risks and play a key role in poverty reduction, food security, nutrition, and ecosystem health. If Article 2.1(c) delivers more and better investment to build the resilience of smallholder farmers, small agrifood enterprises, and poor food consumers, then it can complement the new goal for climate finance in accordance with Article 9, rather than distract from it.

Our new research shows that there are grounds for optimism, but still a long way to go.

Adaptation benefits are often just a side effect. There are promising examples of government measures that could increase the volume and quality of finance reaching small-scale, climate-vulnerable actors in the food system, with potential adaptation and sustainable development benefits. These include fiscal policies; the direction of publicly owned financial institutions; financial and corporate regulation; and information signals to the market. But adaptation is not always an explicit goal. For example, the PM-KISAN subsidy scheme in India is a fiscal policy measure designed to provide smallholder farmers with minimum income support. Funds can be spent on anything, but there is emerging evidence that farmers are choosing to use the subsidy for agricultural investments that could help grow their incomes and build their resilience to climate and other shocks.

For Article 2.1(c) implementation to make a real difference, we need to address the full food system from production, through the supply chain, to the ‘food environments’ in which food is acquired, prepared and eaten. Most of the examples we identified tend to target smallholder farmers at the production end of the food system. Some do address the supply chain, like the Mexican public development bank FIRA’s green bonds. These bundle up and refinance small-scale loans for infrastructure and deliver them to agrifood businesses as well as farmers.

International regimes restrict the policy space for many low and middle-income countries to implement Article 2.1(c). Expanding that space requires multilateral development banks to increase their financing halt the decline in their support for adaptation in small-scale agrifood systems. It demands breaking the negative spiral between food and fertiliser imports, climate shocks and indebtedness. It also means rebalancing power in the agrifood trade system. There are some promising initiatives in the first area, such as the African Development Bank’s new Africa Climate Risk Insurance Facility for Adaptation (ACRIFA), which seeks to systemically support the agrifood climate risk insurance market across the continent. Yet action is, in general, painfully slow.

This last point is arguably the most challenging. Later this year, the international financial architecture will be the focus of the next dialogue on Article 2.1(c). Yet, given the slow progress within the UNFCCC to date, the need to leverage other processes is increasingly evident. There are opportunities to collaborate with other initiatives urging financial system reform, including for food systems. But what's even more important is that climate-resilient development becomes a central point in conversations around the international financial system - especially among the major economic powers who wield the most influence.

The G20 is a key forum. Brazil’s presidency has put financial system reform, climate adaptation and food systems firmly on the agenda, initiating two task forces, the Global Alliance against Hunger and Poverty, and the Global Mobilization against Climate Change.

Brazil has credibility on implementing Article 2.1(c) via its domestic policies, such as the Sustainable Taxonomy, a classification system to identify activities, assets and projects that contribute to climate and other sustainability objectives. Brazil’s taxonomy, against which companies will have to report compliance from 2026, will have a strong focus on agriculture and food. Another example is the programme launched in 2023 by its development bank BNDES. With a government guarantee, it offers financing for agroforestry projects targeting adaptation benefits in the country’s semi-arid Northeast.

Looking to the international level, Brazil, Argentina and Uruguay, identify Article 2.1(c) as “a framework of a structural change of the global economy”. With equity as a central principle, it urges developed countries to take a lead via international investment, while avoiding trade distortive measures.

The success of G20 initiatives depends on what happens after a presidency year, and Brazil has the chance to further link G20 and UNFCCC agendas in 2025 as it assumes the COP30 Presidency. COP30 will consider the next round of Nationally Determined Contributions, due in 2025. Showing how Article 2.1(c) can help finance these plans could allow for more ambition.

The G20 is able to speak to the parts of the financial system that the UNFCCC typically struggles to reach. By credibly prioritising hunger and poverty as well as climate, Brazil can issue a challenge to proponents of Article 2.1(c): if they are serious about implementing it, show the world what it can do for small-scale farmers, agrifood workers and food insecure people.