Financing climate action in urgent regions

The Global South holds the key to the world’s climate future, but it receives less than 20% of climate finance today. By 2030, these regions will house 70% of the world’s population and generate half of global emissions. Yet, the annual climate investment gap in the Global South stands at a staggering $2 trillion. ALTÉRRA’s new White Paper, “Bridging the Gap: Unlocking Climate Investments for the Global South”, calls this shortfall not just a crisis but a generational investment opportunity. Based in Abu Dhabi, Alterra is one of the world’s largest private climate investment funds, launched at COP28 with the UAE’s $30 billion commitment to mobilize $250 billion for climate action by 2030. What the paper reveals: 📌 $2T annual investment gap, with 37% already “investable” or near-investable today 📌 Power & mobility represent 70% of the gap (~$1.4T annually) and are ripe for scalable solutions 📌 Institutional investors are underexposed: just ~9% of climate private capital currently flows to the Global South 📌 Pragmatic near- and medium-term solutions exist: 1- Catalytic capital: deployed through standardized, fund-level structures and pooled aggregation. 2- Data transparency: building AI-enabled, live databases and dashboards to boost investor confidence. The message is clear: With the right tools, partnerships, and catalytic capital, we can turn today’s shortfall into tomorrow’s engine of sustainable growth. 👉 Read the full white paper here: https://lnkd.in/dqNCghYz 💬 I’d love to hear from you: What do you see as the biggest barrier, or opportunity, for channeling climate finance into the Global South? #ClimateFinance #GlobalSouth #EnergyTransition #ImpactInvestment #AbuDhabi #COP28

Following last week's post about one of my two go-to resources on the climate finance architecture, a few people asked about the other. Here it is! The Global Landscape of Climate Finance 2025. Published in June 2025, by the Climate Policy Initiative (CPI), this amazing and comprehensive report covers both public and private sector finance flows, tracing them from source to sector. Take a long look at the Sankey diagram on page 4. A key takeaway is that the dominant flows are in developed countries and are targeted at mitigation finance. Other things that stood out for me include: 1. Stark Regional Disparities in Climate Investment A key finding is the widening gap in climate finance between regions. In 2023, 79% of global climate finance was concentrated in just three regions: East Asia and the Pacific, Western Europe, and North America. This highlights a significant challenge for developing countries. The needs-to-flows ratio underscores this disparity: to meet climate goals, Sub-Saharan Africa requires a 9.4-fold increase in mitigation finance, while Central Asia and Eastern Europe need an 8.7-fold increase. This gap is even more critical for adaptation. In 2023, developing economies received just $46 billion for adaptation, against an estimated annual need of $222 billion, leaving the most vulnerable communities dangerously exposed. 2. The Need for More Catalytic Capital in EMDEs While international climate finance to emerging and developing countries doubled to $196 billion between 2018 and 2023, it remains heavily reliant on public sources, which accounted for 78% of the total. A major barrier for these nations is the lack of affordable capital. The report stresses that developing countries need more catalytic forms of capital - such as grants, guarantees, and catalytic equity - to de-risk projects, prove commercial viability, and ultimately attract the necessary scale of private and domestic investment. 3. A Clear Roadmap to Unlock Investment The report provides a solutions-oriented framework for scaling up finance in developing countries. It moves beyond just identifying barriers to offer actionable strategies. Key recommendations include: * Creating a pipeline of bankable projects through developer platforms and preparation facilities. * Expanding the use of guarantees and risk-mitigation tools to cover risks that private financiers are unwilling to take on. * Developing local currency solutions, like green bonds and guarantee mechanisms, to address currency risks that deter foreign investment. The core message is that the challenge isn't a lack of global capital, but a need for better coordination, targeted policies, and the right financial instruments to direct funds where they can make the biggest impact. ♻️ Please share this with your networks if you feel it is relevant to them!

As #NYCW approaches, it's vital to put the #spotlight on practical and scalable #solutions for #financing the #clean #energy #transition, particularly in #emerging #markets. Our latest report at the Columbia Center on Sustainable Investment, Financing Pathways for the Energy Transition: A Regional Approach, explores seven key #strategies to #unlock #capital and #accelerate clean energy adoption across #regions. From addressing the debt conundrum to leveraging innovative financing mechanisms and expediting private investment, this framework provides actionable insights for policymakers, financial institutions, and investors alike. 📌 Develop a Robust #Regional Clean Energy Strategy 📌 Advance #Structural and Regulatory #Reforms 📌 Address the #Debt #Conundrum 📌 Strengthen #Innovative Financing Mechanisms 📌 Rethink Public Financing and #MDBs 📌 Catalyze #Private #Investment 📌 Accelerate #Technology Advancements These pathways represent a comprehensive approach to overcoming the barriers of high financing costs, regulatory challenges, and the need for debt relief, all tailored to regional realities. As we gather for #NYClimateWeek, it's clear that collaborative, cross-sector efforts are essential to drive the energy transition forward globally. 🌍⚡ For those keen to dive deeper into the intricacies of these strategies and how they can be applied across Africa, APAC, LAC, and Europe, I invite you to explore our report. ➡ https://lnkd.in/diWG4XWu Jeffrey Sachs Lisa Sachs Elena Crete Lucas Didrik Haugeberg Daniel Bernstein Perrine Toledano Andrew Howell Leslie Labruto Jake Hiller #EnergyTransition #SustainableFinance #EmergingMarkets #ClimateAction #FinancingTheFuture #NYClimateWeek

India’s Green Financing Opportunity Could Shape a Century   India stands at a defining moment where a growing economic momentum meets an urgent climate imperative. The capital we choose to deploy today, and the priorities that guide this deployment, will influence not just our development trajectory but also the century that India shapes for the world.   At a global scale, the key outcomes from the recently concluded COP30 point towards the immediacy of climate action and the pivotal role of green financing. With strategic policymaking and the emergence of a climate-focused entrepreneurial ecosystem, India has a real opportunity to lead the global cleantech transition and achieve its commitment to reach net-zero by 2070.   Today, Green finance is powering innovation and scaling climate action while enabling entrepreneurship and opening avenues in infrastructure and job creation. At the heart of this transition is India’s rapidly expanding climate-tech or cleantech entrepreneurship ecosystem. Entrepreneurs are building impactful solutions across solar microgrids, battery storage, EV charging, carbon capture and sustainable packaging. According to a news report published by Inc42, Indian climate tech startups attracted over $2.2Bn in new funding over the last 18 months. Despite this momentum, early-stage climate ventures, especially in Tier 2/3 regions, often face barriers in accessing institutional capital. The government is addressing this through policy pivots that strengthen transparency and build confidence in the climate innovation ecosystem.   Subsequently, upper-layer NBFCs, lenders and development finance institutions are collaborating to bridge funding gaps. We are also seeing the rise of innovative financing structures, including blended finance models that combine concessional and commercial capital, thematic green funds to de-risk early-stage investments and ESG-aligned investment frameworks. These tools are helping channel capital to the most impactful and scalable climate innovations. As policy intent aligns with an expanding pool of capital, I truly believe India is well-positioned to become a global cleantech hub. This convergence of finance, innovation and sustainability promises to power India’s transition, strengthens local economies, create green jobs and ultimately shape the green trajectory of the next century not only for the Global South, but for the world.   Now is the time for policymakers, lenders, investors and corporations to take unified action. If India accelerates its green financing architecture with the same ambition as digital and infrastructure transformation, India could set a global benchmark for climate-led growth. The next century will be defined by those who fund the future and India is on the right track to lead the change.

I should pace my posts, but let me offer some perspective on the newly released #SBTi guidelines for financial institutions. The updated framework includes some incremental improvements but they are outweighed by the persistence of a fundamentally flawed premise: that financial institutions can drive the energy transition through climate-aligned portfolio targets, disclosures, and engagement strategies. These tools aren’t necessarily harmful—engagement can be valuable—but they will not deliver the transitions we need. Sectoral and regional transitions will not occur as the result of disconnected corporate commitments, whose ambition and feasibility depend on factors outside any one corporate actor’s control. And likewise, finance does not flow because of alignment with long-term ambitions. Financial institutions act within mandates, constraints, and markets they don’t control; they can support transitions but cannot catalyze them in the absence of viable investment contexts. The FINZ standard continues to miss this basic point. This confusion is particularly evident in the fossil fuel section of the new guidelines, which conflates financial exclusion with transition strategy. If we want to stop financing fossil fuels, we have to decarbonize the sectors that consume them: power, transport, buildings, industry. When fossil fuel demand falls, so too will financial flows. The transition roadmaps for each of these sectors are well known and feasible: they require a combination of demand pulls, mandates, procurement commitments, adequate infrastructure, policy mandates, and local execution capacity. These transitions are eminently doable if we focused on coordinated investment planning rather than fragmented target-setting and proxy disclosures. What is needed to scale finance is also sector and geography specific. Nowhere is this more apparent and urgent than in EMDEs. EMDEs will account for the majority of future emissions and require the greatest amount of financing, yet finance barely trickles in because a) incoherent support to EMDEs has failed to prioritize the development of financeable investment strategies aligned with national and regional priorities; b) when investable projects exist, they are perceived as very risky (thanks to biased and distorted credit rating methodologies), and outdated prudential regulations and capital adequacy rules further penalize long-term financing in these markets due to their high perceived risk. None of this is addressed in the new standard. If we are serious about scaling climate finance, we need to move from target setting to real transition plans. Technical and institutional roadmaps + an integrated public/private financing framework that incorporates risk-mitigating measures will unlock finance. Without those, finance will continue to be misaligned with global goals, no matter how ambitious financial institutions’ targets may be.

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.

🌍 The Window for 1.5°C is Closing: What Leaders Must Tackle Now The world is entering a critical decade. Due to insufficient action, global warming is very likely to overshoot 1.5°C by the early 2030s. The core challenge for leaders gathered at this year’s summit is simple: translate ambitious pledges into disciplined execution to minimize the magnitude and duration of that overshoot. Based on the evidence across global pathways and finance roadmaps, three issues demand immediate, coordinated action: 1️⃣ Real Zero in Energy & Industry 💡 ✅ Global GHG emissions must fall approximately 43% by 2030 (relative to 2019 levels). ✅ Global renewable capacity must grow 3.5-fold by 2030. ✅ Real zero offers immediate financial benefits. 2️⃣ Financial Transformation & Equity 💰 ✅ Leaders must deliver on the "Baku Finance Goal," scaling up external climate finance to at least USD 1.3 trillion per year by 2035 for developing countries. ✅ Urgent priority must be placed on deploying catalytic financial instruments like guarantees, risk-sharing facilities, and currency hedging through MDBs to help cut the weighted average cost of capital by half in developing countries, especially in Africa and Southeast Asia. ✅ Leaders must scale up innovative mechanisms like climate-resilient debt clauses and debt-for-climate swaps (which could free up to $100 billion in fiscal space) to rebalance fiscal stability and allow vulnerable nations to invest in resilience. 3️⃣ Scaling Adaptation and Nature Stewardship 🌳 ✅ International public adaptation finance flows were only USD 26 billion in 2023. Leaders must pursue efforts to triple annual outflows from multilateral climate funds dedicated to adaptation and resilience from 2022 levels by 2030. ✅ Investing in nature-based solutions is crucial, with needs for nature investment projected to reach USD 350 billion annually by 2035. The science is clear. The resources exist. The systems for cooperation—anchored in the Paris Agreement framework—are in place. The task ahead is disciplined execution to secure a livable, prosperous future for all.  #COP30 #GreenerTogether

The next wave of climate innovation isn’t coming; it’s already here, and it’s gaining momentum in the Middle East. With nearly $20 billion earmarked for green initiatives, Saudi Arabia’s Public Investment Fund (PIF) isn’t just investing in renewable energy or sustainable water management. It’s part of a broader regional shift that is redefining where climate innovation happens. From issuing the world’s first 100-year green bond to committing $5.2 billion already toward certified green projects, PIF is demonstrating that sustainability commitments in the region are serious, scalable, and strategic. This matters… Because the global sustainability transition won’t be won in labs alone. It will be won through systems change: finance, infrastructure, and policy all aligned toward a common goal. But that alignment is fragile. The world remains undecided about sustainability. Geopolitics have seeped into environmental agendas, and countries are letting short-term tensions shape long-term priorities. In this uncertain global landscape, GCC countries are choosing a steadier course: one grounded in resilience. By embedding sustainability into economic strategy and long-term planning, the region is not just adapting to change but positioning itself to shape it. And that approach, in my opinion, will pay off. Across the Gulf, the direction is becoming clearer: • 70% of Saudi Arabia’s renewable energy target is being developed by PIF. • Projects span clean transport, land restoration, and resource circularity, aligned with the UN SDGs. • Regional funds are crafting a blueprint for how emerging economies can lead on climate finance and inclusive growth. Sustainability is not a Western story. It’s a global one. And the next mega innovation may rise from green bonds, desert ingenuity, and bold regional ambition. #GreenFinance #SustainableDevelopment #PIF #GCCVision #ClimateLeadership #MiddleEastInnovation #NetZero #EnergyTransition #ResilienceEconomy #CenterForSustainableFuture Kearney Kearney Middle East and Africa

#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

Climate finance, simplified. The world is not short of money — it’s short of aligned, well-directed capital at scale. Here’s the system — stripped back to what matters: --- 1️⃣ Sources → where the money comes from • Public finance (governments, concessional funding) • Private finance (banks, institutional investors, corporates, equity) • International finance (DFIs, MDBs, climate funds) • Blended finance (public + private catalytic structures to crowd in capital) • Philanthropic capital (foundations, NGOs, first-loss / risk-bearing capital) 👉 Different mandates. Different risk appetites. 👉 One shared objective: mobilize and scale capital into climate solutions --- 2️⃣ Finance mobilized → how it works Capital is: • Pooled → aggregated across sources to reach scale • De-risked → through guarantees, concessional layers, policy support • Directed → toward bankable, high-impact opportunities ➡️ This is where financial engineering meets climate outcomes Success here depends on: • Policy certainty • Risk-return alignment • Strong pipelines of investable projects • Transparent data and credible metrics --- 3️⃣ Uses → where it goes • Mitigation → decarbonizing energy, industry, transport • Adaptation → building resilience to physical climate risks • Nature → protecting and restoring ecosystems & carbon sinks • Sustainable development → infrastructure, jobs, inclusive growth • Just transition → ensuring equity across regions, sectors, and communities 👉 This is where strategy translates into real-economy impact 👉 Allocation decisions here will define the pace and fairness of the transition --- 4️⃣ Outcomes • A stable climate → limiting warming and systemic risk • Resilient communities → stronger adaptive capacity and livelihoods • A thriving planet → restored ecosystems and biodiversity • Sustainable prosperity → long-term, inclusive economic growth 👉 These outcomes are interconnected — not trade-offs, but multipliers --- The takeaway Climate finance is not just about funding projects. It’s about allocating capital with precision, discipline, and intent. The real gap is not capital availability — it’s capital allocation efficiency. The winners in this space won’t just raise capital — they will: • Understand the full system • Navigate risk intelligently • Structure capital effectively • Deploy it where it drives the highest impact That’s how climate ambition turns into real-world outcomes. #ClimateFinance #SustainableFinance #GreenFinance #BlendedFinance #ClimateStrategy #EnergyTransition #NetZero #ClimateAction #ClimateInvestment #ImpactInvesting #ESG #Sustainability #TransitionFinance #ClimateRisk #Adaptation #Mitigation #NatureBasedSolutions #JustTransition #DevelopmentFinance