COP29 must deliver ambitious climate finance deal

It’s critical this month’s global climate summit in Azerbaijan commits to a new finance target that is ambitious, accessible and accountable.

IIED is also calling on leaders to agree on a clear definition of climate finance – one that includes loss and damage, not just mitigation and adaption.

In structuring the New Collective Quantified Goal (NCQG), it’s important the money goes to help those most affected by the climate crisis – people who have done the least to cause it. The NCQG needs to:

• Ensure funding commitments are ‘new money’, additional to existing development support
• Prioritise grant-based funding, rather than loans
• Facilitate a greater share of money reaching communities on the frontline of the climate crisis, and
• Include strong transparency and accountability measures to track the flow of finance.

More broadly, world leaders need to prioritise reform of the international financial system given that many of the countries most affected by climate change are also burdened by crippling levels of debt. And with each new climate event, these countries are pushed deeper into debt.

IIED analysis shows that 58 countries classified by the United Nations as either least developed or Small Island Developing States spent US$59 billion repaying debts in 2022, compared with $28 billion they received in climate finance.

There needs to be new ways of getting money to where it matters most, including debt-for-nature swaps, greater use of pause clauses, parametric insurance, or even outright cancellation of debt where appropriate.

IIED executive director Tom Mitchell said: “The current level of climate finance falls well short when considering the scale of the challenge facing the world. It’s like trying to fight a forest fire with cups of water.

“But this is not just a question of volume, it’s also about the quality of money and the ease of access.

“We need a system that allows local communities to get the help they need quickly. At the moment, very little of the money pledged for the most affected communities ever gets there.

“Spectacular amounts of red tape and bureaucracy are preventing money from reaching those who need it.

“We also need to acknowledge that climate finance sits within a wider financial system that is desperately stacked against the poorest and most vulnerable countries. Reforming these systems is critical.”