By David Marchick, Chief Operating Officer of U.S. International Development Finance Corporation
When President Biden signed an Executive Order on Tackling the Climate Crisis earlier this year, he highlighted the need for the U.S. to support developing countries in climate mitigation as part of a coordinated global effort.
Three months later, U.S. International Development Finance Corporation (DFC) has responded to that call by transforming the way we invest in development. Today DFC is committing to reach net zero emissions in our portfolio by 2040, to focus at least one-third of our new investments on climate by 2023, while unveiling a series of additional commitments to address the climate crisis.
As the U.S. development bank, DFC works to mobilize private investment in emerging markets around the world and is a critical tool in the broader U.S. Climate Finance Plan. We have a long history (together with our predecessor agency, the Overseas Private Investment Corporation) of investing in some of the world’s most challenging markets to build critical infrastructure and expand access to essential services from electricity to clean water. Today, DFC has a $33 billion portfolio that spans Africa, Asia, the Middle East, Eastern Europe, and Latin America.
We understand our new climate commitments are ambitious, but we are confident they are attainable. Most important, we know that these bold steps are necessary to address what President Biden has appropriately called the existential threat of our time.
Today, much of the developing world is already suffering a disproportionate impact of climate change, including more severe weather. Floods, droughts, and hurricanes force millions of people into poverty each year and make it harder for small farmers with limited resources to grow food. Because the changing climate is an immediate threat, DFC’s investments will focus on adaptation as well as mitigation. In addition to ambitious measures that will reduce emissions over time, we will work to identify and support projects to help developing countries adapt to the impacts of climate change they are already experiencing. DFC recently supported a project to help more low-income farmers access affordable insurance to protect against the extreme weather that is increasingly threatening their livelihoods and we will continue to work to advance innovative solutions.
While the need to address the world’s climate crisis is urgent, so too is the opportunity, particularly in the developing world. In addition to experiencing some of the worst effects of climate change, developing countries have massive needs for new electricity to address longstanding shortages that are exacerbated by rapidly growing populations. Throughout Sub-Saharan Africa, only one-third of the population has access to electricity. By working to ensure that more of the energy that is needed is generated from renewable sources, we can make a meaningful impact on people’s lives, while moving the planet toward a more sustainable future.