Barbara Buchner and Paul Bodnar at the 2024 Lab Summit during Climate Week in New York.
During the Lab Summit during Climate Week in New York, Barbara Buchnerglobal managing director of the Climate Policy Initiative, and Paul BodnarDirector of Sustainable Finance, Industry and Diplomacy at the Bezos Earth Fund, looking back on the lab’s journey over the past decade. Founded to bridge public and private finance to combat climate change, the Lab has grown from a pioneer to a transformative network.
In this fireside chat, Bodnar and Buchner, the driving forces behind the creation of the Lab, discuss the Lab's systemic role, lessons learned for scaling climate finance programs, and meeting the growing global demand for climate solutions. Emerging priorities and untapped partnerships required by demand.
The following is an edited transcript of the conversation between Buchner and Bodnar.
Barbara Buchner: Paul, as mentioned before, you've been involved from the beginning. You were one of the people who pushed me to refine our original idea around the lab. For those who don’t know, the lab was officially launched after being invited to attend a meeting of the U.S. Climate Finance Ministers. Paul was a key contributor to this work, so I'm going to turn it over to you and ask you to think about where you envisioned the lab more than a decade ago and maybe get a sense of where we stand today.
Paul Bodnar: When we started this journey, the idea of climate finance was just a trickle, but we knew it would quickly turn into a flood.
What is unique about the Lab, and what we envisioned from the beginning, is an initiative with a systemic role: supporting the development, testing and implementation of impactful ideas in a fundamentally bottom-up manner.
Ideas need champions. Many of us spend years perfecting an idea and sharing it with everyone we meet. So we need something to democratize ideas—an inclusive but competitive process that identifies the most promising ideas and brings everyone together to help them succeed.
The laboratory has remained true to this vision and has always played this systemic, bottom-up role. This approach is the cornerstone of the lab’s work, allowing us to achieve important milestones and make a real impact on climate finance.
Barbara Buchner: Getting these initiatives off the ground is necessary and still requires a strong backer. One reflection is on the importance of involving core government groups such as the UK, US and Germany from the outset in creating a safe space outside the UN to drive such innovation. At the time, there wasn’t much focus on private finance in the UN negotiations, so creating an environment that prioritized private finance was key.
The public and private sectors are critical to the laboratory's success. We're already seeing progress on specific initiatives, but I'd love to hear from you about what more can be done. How can we improve coordination?
Paul Bodnar: I think we've made significant progress, tremendous momentum and innovation in blended finance. Many of the creative tools developed here are already gaining traction, but it's clear we still have a long way to go. The big question is: How do we scale these efforts to meet demand?
You can increase the number of ideas, increase preferential government financing, and tighten processes throughout the system. The real challenge, however, is figuring out how to take effective but small-scale initiatives and hybrid financial instruments and scale them a hundred times.
For example, I’m involved in BlackRock’s climate finance partnership. We secure catalytic funding from development finance institutions and philanthropies and provide institutional investors with access to emerging markets where clean energy exposure is at OECD levels. While the negotiations were successful, they took quite some time. Each hybrid financial instrument appears to be tailor-made for specific investors and stakeholders.
Our challenge over the next ten years is to apply what we learn from the 78 instruments our lab supports and expand our impact on a larger scale. While there is much discussion about reforming climate finance and multilateral development banks, I believe the laboratory community is uniquely positioned to take meaningful action here. We are the cavalry, and how we achieve system-level change is our own business.
Two ideas I think I could contribute include establishing a green investment bank in emerging markets and establishing an “Earth Trading Team.” Green investment banks can serve as a replicable model to create a locally owned, commercially run climate finance system in which international climate finance is more wholesale than retail, led by local leadership.
The Earth Deal Team will function like the investment banking arm of climate finance. Currently, there is no similar role in climate finance, which creates silos. The deal team can bring together multilateral development banks, DFIs, commercial banks and asset managers to drive critical climate finance projects forward.
Barbara Buchner: We have been thinking extensively about this last topic. Our main question is: How can the lab and its impressive network work together to strengthen domestic markets and further leverage them? How can we do this?
The two ideas you mentioned are definitely on our radar. We might even create a group discussion around them. An ongoing challenge for the lab is balancing innovation in difficult areas with achieving the necessary scale. We are increasingly looking at wholesale, more programmatic approaches – how do we unlock private capital at scale and attract investors who are not yet part of the conversation?
Last question: Do we still need to include any specific stakeholders or groups in the room? Do you see an opportunity to engage others in these discussions or raise awareness of opportunities?
Paul Bodnar: First, take a moment to celebrate everything you have achieved. We have high hopes and ambitions for the lab, but we could never predict the impact you will achieve. Sustainably and successfully realizing such a vision requires a delicate balance: engaging all stakeholders so that they feel equally invested, and maintaining a focus on instrumental solutions while thoughtfully localizing the work. The creation of regional and national laboratories was a particularly valuable innovation.
Going forward, if there is one group that we might consider further including, it is the “missing players” in climate finance – the insurance industry and sovereign wealth funds, which still have untapped potential in this area. On top of this, businesses are also becoming increasingly important, as the majority of financing will inevitably come from corporate balance sheets. Increasing their participation could have a transformative impact on expanding the lab's impact.
