Climate finance

Climate finance refers to the mobilisation of financial resources, both public and private, to fund actions that reduce greenhouse gas (GHG) emissions (mitigation) and help societies cope with the impacts of a changing climate (adaptation). It sits at the heart of international climate negotiations because money is what turns climate pledges into projects.

Why climate finance matters

The scale and urgency of climate change demand a coordinated global response. Developing countries, though least responsible for historical emissions, are often the most exposed to climate impacts and the least able to pay for protection. Climate finance is essential to:

• Support developing countries' transition to low-carbon, climate-resilient economies.
• Accelerate clean technology and renewable energy.
• Strengthen adaptation and resilience in the most vulnerable communities.

Sources of climate finance

Public sources

• Multilateral climate funds: such as the Green Climate Fund (GCF) and the Global Environment Facility (GEF).
• Development banks and official assistance: multilateral development banks and bilateral aid from developed countries.

Private sources

• Impact and ESG investment: capital seeking financial return alongside measurable climate benefit.
• Green bonds and green finance instruments more broadly.

The Paris Agreement and the new finance goal

The Paris Agreement (2015) commits developed countries to support developing ones. The earlier pledge to mobilise 100 billion US dollars a year was met, with a delay, around 2022. At COP29 in Baku (2024), countries agreed a New Collective Quantified Goal (NCQG): developed countries are to take the lead in mobilising at least 300 billion US dollars a year by 2035 for developing countries, within a wider ambition to scale all sources of climate finance to at least 1.3 trillion US dollars a year. The "Baku to Belem Roadmap" tasks the COP29 and COP30 presidencies with charting how to reach that larger figure.

Challenges and opportunities

• Scale: the finance mobilised still falls well short of estimated needs.
• Access: Small Island Developing States and Least Developed Countries face barriers to reaching available funds.
• Effectiveness: ensuring money is spent transparently and reaches real projects.

At the same time, the rapid growth of sustainable finance, financial innovation and stronger reporting standards are expanding the pool of capital available for climate action.

At Manglai we help companies measure their carbon footprint and prepare the emissions data that underpins credible climate commitments and access to climate finance. Discover how Manglai can help you.