Global | Climate finance: taking off

Summary

Just as the law of gravity is not the ultimate cause of plane crashes, neither is lack of finance the root cause of failure to achieve climate targets.

Key points

• Key points:
• Climate finance approached 1% of global GDP in 2021-22, one-fifth of what would be needed by 2030 to make the Paris Agreement realistically attainable.
• Climate finance is accelerating, but very unevenly, with cumulative geographic concentration in large economic areas and international flows supported almost entirely by funding from developed economies.
• To increase the quantity and effectiveness of climate finance, we need to lower the premium required to reward the risk of not recovering the principal. In addition to the project, this risk is shaped by the soundness of the institutional framework of the market in which the funds are invested, the certainty of contract fulfillment, the predictability of economic policies and, in this specific case, climate policies.

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