A bigger picture for climate finance

COP29 will kick off in Baku in less than a month. Among the topics for these negotiations of the Parties is to set a new climate finance goal to replace the previous target originally set in 2009.

The landscape around climate finance, however, is very different in 2024 than it was in 2009. Not only has the Paris Agreement provided the overarching framework for climate action, but today all countries also have their own national climate targets.

Climate finance is, of course, critical: in fact, many countries are looking for a strong new collective goal to be negotiated in Baku which can provide much-needed financing and support their national climate targets that are due to be confirmed by in 2025. Overall climate investment needs also continue to soar as climate impacts mount.

Overall climate investment needs also continue to soar as climate impacts mount.

Most of today’s climate finance is directed to investments to reduce greenhouse gas emissions, including for renewables and transport. And much of it is driven by investments in the US, Japan, Europe, China, Brazil, India. Investments in other mitigation sectors such as food and agriculture, waste, and cities, as well as investments across the board in adaptation are severely lagging. This is especially the case for developing countries that are often particularly climate vulnerable.

So while there is much to do to get climate finance flowing at greater scale, including mobilizing more from domestic resources and the private sector, climate finance needs to also cover a wider range of sectors and geographies. It is also vitally important to make sure that the finance that currently goes toward low-emissions, climate-resilient investments actually delivers quantifiable results that benefit communities and countries.

For us at the World Bank Group, evolving our focus from climate finance as an input to one that also measures results is essential to creating a world free from poverty on a livable planet.

For us at the World Bank Group, evolving our focus from climate finance as an input to one that also measures results is essential to creating a world free from poverty on a livable planet. This is why we are working and partnering with other Multilateral Development Banks (MDBs), to develop a common approach for measuring climate outcomes in a more systematic way. This approach will pivot from mostly measuring the volume of our climate finance (or climate co-benefits) to also measuring the results of our financing.

For instance, we know that last year, our climate finance reached over $42 billion and supported a wide range of activities: from Bangladesh; to supporting crisis preparedness and expanding catastrophe insurance in the Pacific Islands; to supporting energy sector reform in Ghana. Our climate finance is tracked using the joint MDB climate finance tracking and reporting methodology.

While our current reporting tells us how much of our financing supported climate action, it does not yet give us a complete picture of results or eventually the outcomes of these investments. That’s why we are beginning to track how our operations are building resilience of people and communities against climate risks and reducing emissions from key transition sectors. This focus on results will help us and countries better understand what works and could be scaled and replicated (or what does not and requires course correction). And it can also help signal opportunities for private sector investment and mobilization of more climate finance overall. We are making this effort along with the other MDBs because we know that when we act together, we can go further.

Our approach speaks to a wider institutional push towards better data and more transparency and accountability. Ultimately, investing in forests, clean energy, and resilient transport is about more than a dollar going in: it’s about people having cleaner air to breathe, reliable energy, good jobs and opportunities not just to survive but to thrive.