To meet the country’s goals and targets on sustainable development and the environment – in addition to sound policies and an enabling environment for the public sector – a significant and sustained investment from the private sector is required. These investments (or “green” finance) should be directed towards “green” activities that contribute towards building climate resilience and promoting inclusive green growth.
However, at present, PNG lacks an official taxonomy to guide government agencies, financial institutions, and other private sector entities on which activities are considered ‘green’ and/or ‘inclusive’. For government agencies, this makes it difficult to monitor, regulate, and promote green financial flows into and within the country. For financial institutions and private sector entities, it is difficult to know whether they are complying with a certain policy (e.g., mandatory disclosure on green investments) or are eligible for incentives related to green activities (e.g., low interest green loans) [1].
Key policies and governance approach
‘Climate Resilience and Inclusive Green Growth’ is one of the key pillars of Papua New Guinea’s Development Strategy. Its importance is emphasized in the PNG Vision 2050, PNG Development Strategy Plan 2010-2030, National Strategy for Responsible Sustainable Development (StaRS), and the Medium Term Development Plan 2018-2022 [1].
PNG’s Development Cooperation Policy 2018-2022 provides clear policy direction to effectively guide the government on partnerships with traditional, new and emerging development partners, including the private sector, to mobilise resources to implement the localised SDGs. The private sector is a non-traditional partner that the government is yet to formally engage with. Various ways in which national and subnational agencies work with the private sector include seeking input both when policy is being developed and legislated, and when initiatives and means of implementation to achieve targets in the national priorities are being discussed [2].
The Business Council of Papua New Guinea (BCPNG) is leading and championing the private sector’s engagement on SDGs. BCPNG has provided a strategic SDG Advisory Group and implements strategic SDG projects as part of its corporate social responsibility activities. GoPNG will work closely with BCPNG to support the scaling up of interventions in the renewable energy sector, particularly the widespread use of solar power and other renewable energy technologies [2].
In addition, in 2021, a project was initiated in PNG to develop an Inclusive Green Finance Policy (IGFP). The IGFP would include a green taxonomy that will help promote green financial flows thus promoting green activities and overall, helping to achieve climate resilience and inclusive green growth for PNG. The goal of this policy is to increase and facilitate the flow of national and international funds and investments in a systematic manner towards business, projects, and initiatives that are ‘inclusive’ and/or ‘green’. There are three outputs to this Inclusive Green Finance Policy (IGFP) project: (i) a green taxonomy with strong emphasis on financial inclusion, (ii) a diagnosis on the state of inclusive green finance in PNG, and (iii) an implementation roadmap [1].
SUCCESSES AND REMAINING CHALLENGES
There are several options countries can adopt to fully use private capital to achieve SDGs and promote climate action, especially in the renewable energy sector and natural disaster resilient infrastructure. Unleashing the potentials of the private sector capital through Public-Private Partnership arrangements and encouraging or leveraging financial markets for development is the option to take. However, GoPNG must have appropriate financial frameworks and regulations in place to set the environment for the private sector to operate [1].
- Strengthen the administration’s capacity to collect, compile, verify and disseminate data relevant for developing bankable proposals to access sustainable finance.
- Facilitate access to finance for the private sector and support the private sector to a play more significant role in sustainable programs and projects from the national level to the local level.
- Introduce consistent legislation and provide regulatory certainty for Public-Private Partnerships.
- Harmonize policy, legislation, and regulations so that there is a coherent policy environment across all sectors.
- Encourage more private sector organizations to undertake corporate social responsibility through funding of SDG programs and projects at the national and sub-national levels.