Exploring Operational Pathways for Article 2.1(c) of the Paris Agreement in Africa

A Case of High Carbon Financial Assets and Financial Sector Transformation in South Africa 

Amid multilateral processes, a critical gap persists in understanding the scope of Article 2.1(c) of the Paris Agreement and its varied interpretations and implementations across nations. This lack of a common understanding is particularly concerning given the urgent imperative to combat the climate crisis, where finance stands as a pivotal precursor to achieving essential mitigation and adaptation objectives. Article 2.1(c), the Agreement’s third long-term goal, underscores the imperative to “make finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development”. 

Beyond the confines of multilateral discussions, public and private stakeholders are actively engaged in elucidating the operationalisation of Article 2.1(c) within diverse contexts. For example, proposals for government-led frameworks and financial mechanisms have emerged as vital tools for aligning financial flows with pathways towards low GHG emissions and climate-resilient development. 

While some countries have signalled their commitment to integrating Article 2.1(c) into their Nationally Determined Contributions (NDCs), explicit pledges are scarce, with Nigeria notably leading this charge among African nations as of 2021. However, the diverse circumstances of individual countries necessitate tailored approaches to implementing Article 2.1(c), especially in countries grappling with high-carbon assets alongside sophisticated financial systems. 

This paper conducts a deep dive into the case of South Africa, a nation heavily reliant on coal for electricity generation yet committed to reducing its carbon footprint. It scrutinises the pivotal role of the financial sector, particularly institutional investors, in reshaping financial and investment flows to align with pathways towards low GHG emissions and climate-resilient development. By focusing on South Africa’s unique circumstances, this study aims to offer a pathway for operationalising Article 2.1(c), including insights applicable to regions confronting similar challenges. 

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