Breaking down siloes: reforming financing and trade for climate adaptation in LDCs

The least developed countries (LDCs) face a three-pronged challenge in accessing finance for climate adaptation: escalating impacts, shrinking domestic fiscal space and dwindling international aid budgets.

External debt, high capital costs and highly intermediated financing mechanisms — where financing has to pass through many actors, each with their own transaction costs and conditions — hamper adaptation and resilience efforts.

Concessional finance and trade must evolve to address these challenges. International financial architecture reforms should integrate debt relief, de-risk private finance, help mobilise domestic resources and include a reoriented trade agenda to support climate-vulnerable economies.

This briefing identifies critical gaps and synergies to leverage finance and trade for climate adaptation, and outlines a pathway towards equitable, scalable and country-led adaptation finance. It draws on recent dialogues with, and insights from, policymakers, financial institutions and philanthropic leaders.