Climate aid funding concerns

« Japan, France, Germany, the United States and other wealthy nations are reaping billions of dollars in economic rewards from a global program meant to help the developing world grapple with the effects of climate change, a Reuters review of U.N. and Organisation for Economic Cooperation and Development data shows. » « The financial gains happen as part of developed nations’ pledge to send $100 billion a year to poorer countries to help them reduce emissions and cope with extreme weather. » « Wealthy nations have loaned at least $18 billion at market-rate interest, including $10.2 billion in loans made by Japan, $3.6 billion by France, $1.9 billion by Germany and $1.5 billion by the United States, according to the review by Reuters and Big Local News, a journalism program at Stanford University. » « At least another $11 billion in loans – nearly all from Japan – required recipient nations to hire or purchase materials from companies in the lending countries . » « Offering climate loans at market rates or conditioning funding on hiring certain companies means that money meant for developing countries gets sent back to wealthy ones." “From a justice perspective, that’s just deeply reprehensible,” said Liane Schalatek, associate director of the Washington branch of the Heinrich-Boll Foundation, a German think tank that promotes environmental policies." « “Climate finance provision should not be a business opportunity,” Schalatek said. It should “serve the needs and priorities of recipient developing countries.” » « Many of the conditional loans and grants Reuters reviewed were counted toward developed nations’ pledge to send $100 billion a year by 2020 to poorer countries disproportionately harmed by climate change. » « The Paris Agreement does not state outright that developed nations should make amends for historic emissions. [...] the agreement was short on specifics. [...] It did not define whether grants should be prioritized over loans. Nor did it prohibit wealthy nations from imposing terms advantageous to themselves. » « Heavily indebted countries face a vicious cycle: Debt payments limit their ability to invest in climate solutions, while extreme weather causes severe economic losses, often leading them to borrow more. » The example of Guayaquil  « France gave a $118.6 million non-concessional loan to Ecuador’s port city Guayaquil in 2017 to build an aerial tramway. » « Debt from the loan has added to Guayaquil’s $124 million budget deficit. » « France was projected to earn $76 million in interest over the 20-year repayment period. » « The loan agreement did not require Guayaquil to hire a French company. Nonetheless, French transportation company Poma won the contract to build the tramway, along with Panamanian company SOFRATESA, founded by a French citizen. » « Nearly all of the Aerovia’s components – including its cabins, electrical control panels and cables – were manufactured in France and Switzerland »

Not all billions are equal. A billion at a 3% concessional rate is not the same as the same billion at 16%. But that is the reality of developing countries in trying to finance their climate action, and COP29 NCQG provides a window to change that. At Environmental Defense Fund, we just released a report (https://lnkd.in/ew-wf2WV) that presents how it isn’t just about the amount of $$$ for climate; it’s about "quality": making sure the funds reach the right places and drive real change. We focus on three elements that drive quality: 1. #Concessionality: Affordable funding, so countries aren’t faced with further finance and debt burdens. 2. #Access: Ensure that funds can actually reach developing countries and communities. This means addressing some of the administrative and logistical challenges that often prevent funds from reaching these countries. 3. #Impact: Ensuring these dollars deliver real, lasting results. And being honest about what the data says, to improve outcomes over time. At COP29, the New Collective Quantified Goal #NCQG will be a milestone and guiding framework for climate finance in the coming years. To be truly effective, it must prioritize high-quality standards in climate finance flows, focusing on key issues such as concessionality, accessibility and measurable impact. Additionally, it should urge decisive action from multilateral institutions and donor governments to ensure these goals are met. The substantive framework for a draft negotiating text for the NCQG includes qualitative elements. We urge that negotiating Parties retain this language in the final NCQG text, including specific language on leveraging concessional finance and other innovative tools to mobilize new sources of finance, enhancing channels of access for climate finance, reforming the multilateral development banks, strengthening complementarity between climate funds and improving financial disclosure measures.

𝗪𝗵𝗲𝗿𝗲 𝗮𝗿𝗲 𝘄𝗲 𝟲 𝘄𝗲𝗲𝗸𝘀 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝗨𝗦𝗔𝗜𝗗 𝗴𝗹𝗼𝗯𝗮𝗹 𝗮𝗶𝗱 𝗳𝗿𝗲𝗲𝘇𝗲? Here are a few takeaways from 50+ conversations I’ve had in the last six weeks. The dust is still settling, but the big picture is coming into focus. 🇺🇸 𝗨𝗦𝗔𝗜𝗗 𝗙𝘂𝗻𝗱𝗶𝗻𝗴 𝗜𝘀𝗻’𝘁 𝗖𝗼𝗺𝗶𝗻𝗴 𝗕𝗮𝗰𝗸 𝗔𝗻𝘆𝘁𝗶𝗺𝗲 𝗦𝗼𝗼𝗻 🔹 No one expects a quick return. Some speculate that if a major crisis—like a pandemic—hits, the administration may be forced to restart programs, but only reactively. 🔹 People are divided on whether or not the administration will honor the $2 billion in payments that the Supreme Court upheld. Most agree that the deadline (of today) will not be honored. But a slight majority believe that the payments will be made eventually. Others have no faith. 🔹 For the few programs that have waivers, getting paid is extremely uncertain. Some orgs are moving forward, but risk delayed or withheld funds, making planning difficult. 🔹 Many implementing orgs are trying to pivot—some to private sector partnerships, others to domestic work, and most just trying to survive. Some have already shuttered. 💰 𝗣𝗵𝗶𝗹𝗮𝗻𝘁𝗵𝗿𝗼𝗽𝘆: 𝗡𝗼𝘁 𝗧𝗵𝗲 𝗦𝗮𝘃𝗶𝗼𝗿 𝗪𝗲 𝗛𝗼𝗽𝗲𝗱 𝗙𝗼𝗿 🔹 Only a few large foundations are making moves. MacArthur Foundation increased its payout rate from 5% to 6%, a bold move I hope others follow. Bloomberg Philanthropies pledged to fill climate funding gaps as government support retreats. I was expecting more by now. So were many others I talked with. 🔹 Many smaller and medium foundations are overwhelmed with requests and doubling down on existing grantees with private commitments and assurances. 🔹 Most folks I've talked to don't have a lot faith philanthropy at the moment— things are moving too slow with some reprioritization happening behind closed doors, but not at a volume that will be able to meet shortfalls. 🏢 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗦𝗼𝗰𝗶𝗮𝗹 𝗜𝗺𝗽𝗮𝗰𝘁 🔹 Many tech companies and corporations were already scaling back social impact work before the new administration (with a few exceptions). 🔹 Many are quietly aligning with administration priorities, while others deferring any social impact funding decisions to legal and exec teams. 🔹 No one wants to attract attention right now. Companies are hesitant to make big moves, waiting to see how things shake out. ⚠️ 𝗧𝗵𝗲 𝗢𝘂𝘁𝗹𝗼𝗼𝗸? 𝗨𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻, 𝗕𝘂𝘁 𝗡𝗼𝘁 𝗛𝗼𝗽𝗲𝗹𝗲𝘀𝘀 🔹 Many remind me: It won’t stay this bleak forever. 🔹 There’s an enormous amount of resilience—people helping people. Community building, grassroots efforts, support networks and convenings forming. Will do more posts on this, but that is where the energy is rn. 🔹 Some tempered but tangible excitement for rebuilding in new ways and using our collective creativity to grow from the ashes. I'm seeing and hearing a lot of this. What are you seeing in your networks? Let’s keep the conversation going. Sharing is CARING.

Countries are off track on the 2030 Agenda for Sustainable Development, with around half of the 140 Sustainable Development Goal (SDG) targets for which sufficient data is available deviating from the required path. On a “business-as-usual” pathway, where social, economic and technological trends do not shift markedly from historical patterns, the SDGs as a whole would remain out of reach even in 2050. The latest 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐧𝐠 𝐟𝐨𝐫 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 𝐃𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭 𝐑𝐞𝐩𝐨𝐫𝐭 (https://lnkd.in/eykeRr8Z) reveals a critical funding gap of USD $4 trillion annually (pre-COVID $2.5 trillion, see figure 👇 ), primarily affecting developing nations. As we stand at a pivotal moment, it's clear that traditional funding methods are insufficient to meet these escalating needs, especially in the face of global challenges like climate change, inequality, and economic instability. As high as financing gap estimates are, they pale in comparison to the costs of inaction. The cumulative additional economic and social costs incurred from climate change under a business-as-usual scenario through 2050 are estimated to be almost five times larger than the climate finance needed to limit temperature increases to 1.5 degrees Celsius. Every dollar invested in risk reduction and prevention can save up to 15 dollars in post-disaster recovery efforts. 🔑 Key Insights: 🔹 Developing countries face steeper financing costs, severely hampering their sustainable development goals (SDGs). 🔹 Part of the gap is still the huge amount of (implicit) subsidies going to fossil fuels (7% of GDP 👇...this is already more than the $4 trillion that is needed) 🔹 The Role of Private Finance: Private finance emerges as a pivotal player. However, to truly make an impact, it must align more closely with sustainable development goals. It is clear that the largest part of sustainable finance is nothing else than risk mitigation (see figure 👇) 🔹 How to get better finance: ◼ Innovative Financing: Leveraging tools like green bonds and social impact investing to direct funds where they are most needed. ◼ Reforming Financial Systems: Enhancing the capacity of financial institutions to support sustainable projects through improved regulatory frameworks. ◼ Encouraging Public-Private Partnerships: These can mobilize significant resources, combining the agility of private sector innovation with the authoritative backing of public entities. As the 2025 International Conference on Financing for Development in Spain approaches, there's a collective urgency to reform our global financial systems. This is crucial not only for bridging the finance gap but also for ensuring that investments are both impactful and aligned with the global sustainable agenda.

A new analysis from Carbon Brief (link below) shows that the UK is, in practice, halving its climate finance for developing countries, once inflation and “creative accounting” are taken into account. Under the current approach, funding ring-fenced for nature and forest protection is effectively being eliminated. This is being framed as fiscal prudence, but it is closer to economic malpractice. Britain’s economy is not insulated from the natural systems it is now defunding. Its supply chains depend on rainfall patterns shaped by distant forests. The food it imports relies on soils sustained by biodiversity. The medicines used across the NHS originate in genetic material found in ecosystems we are choosing to abandon. When these systems degrade, the impacts do not stay local. Food prices rise. Supply chains fracture. Water stress intensifies instability and displacement. Cutting climate finance does not reduce exposure to risks, it increases it.  We are spending ever more to patch the damage, and ever less to prevent it. Military budgets soar while aid budgets shrink. We pour billions into disaster relief, peacekeeping, and rebuilding after climate shocks, yet hesitate to invest a fraction of that in resilience, prevention, and root-cause solutions. The IPCC tells us that every dollar spent on resilience saves up to ten in recovery, but still, we lurch from crisis to crisis. It is the economics of denial, paying a premium for failure instead of investing in success. The UK has the capability, the credibility, and the experience to lead on one of the defining issues of our time and in the moment it is most needed, it is turning away. 

$1.7B pledge to support Indigenous and local forest tenure has been met, a year early When governments and private donors pledged $1.7 billion at the 2021 U.N. climate conference to strengthen Indigenous and local communities’ land rights, few expected the target to be met—let alone ahead of schedule. Yet four years later, the funders have announced that they have fulfilled their commitment a year early, reports Aimee Gabay. In a field marked by broken promises, this is rare. The pledge was born of frustration. Between 2011 and 2020, less than 1% of global climate finance supported projects tied to community land tenure. The “Forest Tenure Pledge,” as it became known, sought to correct that imbalance. Rebeca Sandoval of the Ford Foundation said the aim was to make the rights of Indigenous peoples, Afro-descendants, and local communities a lasting priority in donors’ agendas. “And that is what happened,” she said. The figures tell a mixed story. Direct funding to Indigenous and community-based organizations grew from 22 recipients in 2021 to 112 in 2024, according to the Forest Tenure Funders Group. But the proportion of total funds going straight to local organizations still hovers in the single digits. “The important thing is that a path was opened,” said Levi Sucre Romero of the Mesoamerican Alliance of Peoples and Forests. “That path needs to be broadened for future pledges.” Observers credit the pledge’s success to unusual coordination among funders, facilitated by joint platforms and shared monitoring. Yet they note its limits. Early consultations with communities were scant, and the “plumbing” of aid—the compliance rules and bureaucratic hurdles that block smaller organizations—remains clogged. “A lot of these organizations aren’t traditional Western NGOs — they’re social, cultural, or political movements,” said Bryson Ogden of the Rights and Resources Initiative. “The funding architecture doesn’t make it easy for them to access resources.” There were lessons too. Continuous dialogue and transparency matter more than lofty targets. So does inclusion: despite modest gains, projects centered on women’s leadership and youth remain scarce. And protection for forest defenders, still subject to violence and intimidation, lags behind the rhetoric of rights. Now funders are debating whether to launch a second pledge. But global aid budgets are tightening, with traditional donors shifting resources toward defense. Without renewed political and financial commitment, the gains could erode as quickly as they came. Ultimately, a pledge is only as good as the trust it builds—and that trust, once earned, will require careful tending. 📰 story: https://lnkd.in/gatXzezH

The Baku to Belém Roadmap to 1.3 Trillion is a plan for action, building on COP29's finance milestone agreement, and carrying momentum into #COP30.  At its core, the Roadmap is about turning commitments into practical, inclusive climate finance action that’s effective in delivering outcomes that protect lives and strengthen economies.   For the first time, more than 200 governments, banks, businesses, and communities have joined forces to outline workable solutions for mobilizing climate finance.     The Roadmap shows how, by working together, we can scale up climate finance towards USD 1.3 trillion a year by 2035, helping developing countries meet their climate goals.     This can bring tremendous benefits for the global economy – generating jobs, protecting communities, and driving innovation.    The task is ambitious, but achievable. The tools exist; what’s been missing is coordination and shared commitment.     This Roadmap provides a guide to both, aligning public and private finance behind a common direction, and building confidence that 1.3 trillion is within reach.     Times are tough; many governments have scarce resources and hard choices. But positive tipping points are already taking hold: from dramatic declines in the cost of clean energy, to innovation in sectors of the economy we thought would take decades to decarbonise.     It's also high time for a paradigm shift. Treating climate finance purely as cost, or as charity, is misguided and self-defeating, and has held back the progress we need.    Make no mistake: scaling up climate finance hugely benefits every nation. It’s a vital investment in resilient global supply chains, supporting low-inflation growth, food security, and a stronger, more productive global economy that underpins peace and prosperity.    Getting finance flowing means expanding access to catalytic grant finance. It also means unlocking low-interest capital, creating fiscal space, managing debt pressures, and de-risking investment.     Innovative tools – such as debt swaps and private capital reinvestment – can help put money to work where it matters most: into clean energy and resilience, enabling countries to implement Nationally Determined Contributions and National Adaptation Plans more quickly and fairly.    Recent climate shocks show what’s at stake, as climate disasters like Hurricane Melissa rip through communities and economies. So, every early dollar deployed now helps avoid far greater costs later for all nations. There’s no time to waste.    The Paris Agreement is working to deliver real progress, as our three recent reports show, but not nearly fast enough.     By scaling climate finance to match the scope of the climate crisis, we can turn ambition into momentum, making climate action a driver of economic growth, stability, and shared prosperity.    From Baku to Belém, we are moving from agreement to action, focusing on solutions and alignment for people, prosperity, and the planet.

As COP30 convenes under the Brazilian presidency’s call to “move from negotiation to delivery,” the International Rescue Committee urges global leaders to prioritize the needs of crisis-affected communities on the frontlines of the climate crisis. Despite bearing the brunt of climate shocks, these communities remain underserved by global adaptation efforts—leaving millions at risk.   Despite severe and overlapping risks, conflict-affected and climate-vulnerable countries receive only 12% of adaptation finance distributed to developing countries and have been disproportionately impacted by recent aid cuts.    Now is the time for a paradigm shift in climate finance. Grant-based adaptation finance, delivered with maximum cost-efficiency and a people-first approach, can help protect communities living at the intersection of the climate crisis and armed conflict.   Without urgent course correction, the climate crisis in these regions could trigger a full-scale development collapse. Learn more in the IRC’s latest report: 

Is there room to talk about the climate crisis at the UN General Assembly? With geopolitical tensions at unprecedented levels, the SDGs in peril, and debt and inequality on the rise, the climate issue may not take centre stage. Yet, for the millions - hundreds of millions - of people affected by floods, droughts, heatwaves and air pollution, the climate crisis is an emergency. But they risk being left behind. In fact, those hardest hit by the climate crisis are also often those who have been left behind in today's global economy and who, ironically, live in countries that contribute the least to global emissions. UN Secretary-General António Guterres made it clear in his speech at the #UNGA General Debate on Tuesday that in today's "climate meltdown, [...] the poorest and most vulnerable are hardest hit". Take the example of the African continent. Extreme weather events cost African countries up to 5% of their GDP each year. Despite a significant increase in global climate finance, vulnerable countries still receive an unfairly small share of the funds. In 2022, global climate finance flows reached $1.3 trillion, but only $63 billion (5%) were allocated to climate adaptation, and only $13 billion went to Africa. Despite evidence that every $1 invested in adaptation returns between $2 and $10, adaptation finance is not prioritised. To build resilience to the growing impacts of climate change, adaptation funding for Africa needs to increase up to tenfold, reaching over $100 billion per year by 2035. If this investment isn't made, Africa could lose up to $6 trillion in potential economic benefits by 2035. That's a lot of numbers, and there's a lot of imprecision in reporting on climate finance. But it seems pretty clear that the money is there, and that it is not reaching those who need it most. So what should we do? At COP29 this November, put pressure on world leaders to deliver on their climate promises, including by stepping up funding for climate adaptation and resilience, with a focus on fragile countries and vulnerable communities. Making the Loss and Damage Fund operational will help, along with other funding mechanisms. As the Secretary-General said, “by next year , [..] those who shoulder the blame must foot the bill.” Video: United Nations News Centre #ClimateAction #ClimateCrisis #ClimateWeekNYC

#SIDS face severe debt vulnerabilities, with nearly half of SIDS (around 40–45%) already at high risk of debt distress or in debt distress, 13% at moderate risk, and only about 42% at low risk. These tiny economies carry disproportionately heavy debt burdens of government debt averages 57% of GDP in small states (about 10 percentage points above other developing economies). Repeated climate-related disasters drive much of this debt. For example, post-disaster borrowing accounted for 40% of #Tonga’s new debt from 2008–2023. Such shocks repeatedly force SIDS to take on expensive loans just to rebuild, trapping them in a cycle of debt. Climate change intensifies this cycle, as SIDS suffer more frequent and costly disasters (#Dominica lost 225% of GDP to one hurricane in 2017) and face existential threats like sea-level rise. Despite often having middle-income status, SIDS are far more structurally vulnerable about 35% more vulnerable than other developing countries on average a reality not reflected in standard financing criteria. This is why a “one-size-fits-all” approach by traditional finance institutions falls short. SIDS require highly concessional, flexible financing tailored to their unique climate and economic fragility, rather than market-rate loans based solely on income level. The International Debt Report 2025 mentioned that half of low-income countries are now in or at high risk of debt distress (up from 24% in 2013 to 54% in 2024), with climate shocks a key driver. Several new financing opportunities are emerging to help high-risk SIDS manage or reduce debt while funding climate action. One promising avenue is debt-for-climate or debt-for-nature swaps, where a portion of a country’s debt is forgiven in exchange for investments in conservation or resilience. These swaps directly cut debt burdens and channel funds into climate priorities. Recent examples include Ecuador’s 2024 debt-for-nature swap, which bought back $1.5 billion of bonds for $1.0 billion (35 cents on the dollar), instantly slashing Ecuador’s external debt by $527 million while freeing hundreds of millions for Amazon rainforest protection. For SIDS which are often middle-income yet as vulnerable as the poorest countries, leveraging vertical climate finance and innovative debt structuring is not just desirable but essential. It shields them from the “debt–disaster” trap, ensures that climate adaptation efforts are financed by grants or cheap loans rather than punitive debt, and aligns global climate action with debt sustainability. The experience of recent years from IDA’s scaled-up support to pioneering debt swaps provides compelling evidence and successful examples that should be expanded to fill the remaining financing gaps for SIDS facing high debt risks. #DebtDistress #ClimateFinance #DebtForClimate #DebtForNature #ClimateAdaption #SustainableFinance #ClimateResilience #DebtManagement #SmallIslands #ClimateCrisis