Using the UK’s Special Drawing Rights to Tackle Covid-19 and Climate Change

Special drawing rights (SDR) are an international reserve asset which provide member countries with greater access to liquidity. The UK will receive circa US$27 billion worth of SDRs in August 2021. This paper from the charity Cafod argues that the UK should use this increase to tackle the climate crisis and scale up Covid-19 vaccines for poorer countries.

The paper explains that global climate change focused funds such as the Green Climate Fund and the Adaptation Fund have a huge financing gap. It recommends that the UK government deploy £9.5 billion worth of its SDR allocation towards mechanisms such as these.

The report argues that providing finance for global climate initiatives is essential to ensure that Cop26 hosted by the UK in Glasgow later this year is a success, and can raise the ambition on climate change that is needed.