Climate Financing That Puts People First

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An unprecedented number of calamitous climate events—floods and heat waves, superstorms, droughts, and uncontrollable forest fires—are putting people’s lives in danger, disrupting economies, and causing havoc in the natural world.
Need to move from promises and pledges to concrete implementation; resources must be allocated equitably and generously—putting people and the planet first.
Broad access to climate financing is indispensable because climate shocks “know no borders.”

Over 75 percent of global climate financing is spent in the countries where it is raised.
Africa contributes less than 8 percent of global greenhouse gases but receives less than 5.5 percent of global climate financing.
Principle cited: “common but differentiated responsibilities and respective capabilities” (formalized at the UN’s 1992 Rio Earth Summit).
About 60 percent of developing economies’ needs are not included in their Nationally Determined Contributions under the Paris Agreement.
The $100 billion pledge made in 2009 at COP15 in Copenhagen is characterized as “pitifully inadequate” given the needs.

Estimated climate investment needed:
- $4.5 trillion a year by 2030.
- $6 trillion a year by 2050.
Current annual spending on climate: $632 billion.
Only 7 percent of climate financing today is earmarked for resilience and adaptation.
Global Commission on Adaptation (2019) estimate: investing $1.8 trillion in initiatives over 10 years could yield $7.1 trillion in total benefits.
World Bank estimate: climate change could push 132 million people into poverty by 2030, particularly in Africa and South Asia.

COVID-19 pandemic and Russia’s invasion of Ukraine have led to higher food and energy prices and tighter financial conditions, increasing fiscal burdens on emerging market economies and siphoning resources from sustainability projects.
The cost of implementing adaptation and mitigation far exceeds available deployed resources.
If multilateral development banks dedicated all funds to the green transition, it would amount to about 4 percent of needed financing (World Bank 2020).
Shifting only 1–1.5 percent of global private sector assets—worth over $450 trillion—could bridge the climate financing gap (FSB 2021).
Philanthropic climate-mitigation financing in 2020 ranged between $6 billion and $10 billion, less than 2 percent of all philanthropic financing worldwide.

International calls for a restructured global financial architecture to crowd in private investment for countries most in need; notable proposals include the Bridgetown Initiative and the G20 Capital Adequacy Framework.
Sharm El Sheikh Guidebook for Just Financing (launched by Egypt during COP27) aims to help stakeholders move from pledges to implementation by identifying players, clarifying opportunities and risks, and promoting partnerships.
Guidebook introduced the first definition of “just financing” to transcend climate justice and just transition; focuses on equitable allocation of benefits and burdens and safeguarding the social dimension of the transition.
Just financing operationalizes “common but differentiated responsibilities and respective capabilities” by addressing:
- Country ownership
- Access
- Affordability
- Resource allocation bias
- “Additionality” — benefits attributable solely to an intervention
- Good governance
Just financing includes 12 corresponding guiding principles and “accounts for historical responsibility for climate change while ensuring equitable access to quality and quantity climate financing that supports resilient development pathways, leaving no one behind.”

77 percent of developing economies’ sovereign credit ratings are “non-investment grade,” increasing perceived risk.
Large information gaps exist regarding opportunities, investor appetite, and investment impact.
Closing the information gap could:
- Shed light on risk-return profiles
- Lower transaction costs
- Enable new financing mechanisms
- Generate high-impact investable projects that are Paris-aligned and contribute to country priorities

Egypt launched its Country Platform for the Nexus of Water, Food and Energy (NWFE نُوَفِّـــي ) during COP27 to emphasize country ownership and a country-led, programmatic, bottom-up approach.
NWFE نُوَفِّـــي (Arabic: “fulfilling pledges”) aims to:
- Introduce the missing link of investable projects and bridge the information gap
- Harmonize stakeholder efforts for sustainable and productive interactions
- Design, structure, and prepare concrete mitigation and adaptation projects
- Mobilize concessional financing and catalyze private investment
- Use innovative financing, including blended and debt swaps for climate action (Al-Mashat and Berglöf 2023)

Scale up climate financing substantially to meet needs estimated at $4.5 trillion a year by 2030 and $6 trillion a year by 2050.
Reorient allocation toward resilience and adaptation given only 7 percent is currently earmarked for those purposes.
Mobilize private capital by:
- Shifting 1–1.5 percent of global private sector assets (over $450 trillion) toward climate finance.
- Reducing informational barriers to clarify risk-return profiles and investor appetite.
Operationalize “just financing” principles to ensure equitable access, affordability, country ownership, additionality, and good governance.
Promote multistakeholder partnerships to unlock funds from public, private, and philanthropic actors and to harmonize efforts across countries.
Encourage knowledge sharing and replication of successful country-led platforms like NWFE نُوَفِّـــي ahead of international negotiations (e.g., COP28).

Rania Al‑Mashat, "Climate Financing That Puts People First," F&D Magazine, September 2023.

Climate Financing That Puts People First
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