More Money Unequal Access:
The Challenge of Climate Finance

Global climate finance has surpassed US$2 trillion annually, an important milestone in the effort to address climate change. Yet behind this headline lies a more complicated reality. Much of the money remains concentrated in wealthier economies and commercially attractive sectors, while adaptation and climate-vulnerable countries continue to face significant financing shortfalls.

This contradiction raises an important question: If more money is being invested in climate action than ever before, why are we still struggling to finance the transition?

During the Better Climate Governance Learning Forum on Climate Finance in January 2026, four speakers explored different dimensions of this question, from preparing bankable projects and attracting private investment to strengthening fiscal policies and the role of multilateral development banks. Their discussions highlighted a central message: mobilising finance is only one part of the challenge. Making that finance accessible, effective and aligned with climate and development priorities is equally important.

As COP31 approaches in Antalya, Türkiye, these insights offer a useful starting point for examining where climate finance currently flows, what remains underfunded and what should change.

The climate finance paradox: More money, persistent gaps

According to the Climate Policy Initiative’s Global Landscape of Climate Finance 2026, global climate finance exceeded US$2 trillion in 2024, with preliminary estimates reaching US$2.1 trillion in 2025. Private investment accounted for more than US$1.2 trillion in 2024. Commercial financial institutions, corporations and households increasingly finance renewable energy, electric vehicles, clean technologies and other low-carbon investments. However, the distribution of this financing reveals significant imbalances.

Approximately 85% of global climate investment was mobilised through domestic markets, while advanced economies and China accounted for around 80% of total flows. Mitigation finance reached US$1.9 trillion in 2024, heavily concentrated in energy-related investments. Other sectors, including agriculture, industry and waste, received comparatively limited funding. These patterns reveal that investments are geared towards what is commercially viable, but not necessarily where climate needs are greatest.

The distinction between global investment and international climate finance is particularly important. The US$2 trillion figure includes domestic public and private investment worldwide. It is not equivalent to the finance provided by developed countries to support developing nations under international climate agreements.

Climate finance also comes from multiple sources. Governments provide bilateral support, multilateral development banks finance infrastructure and policy reforms, dedicated institutions such as the Green Climate Fund support developing countries, and private investors finance projects that can generate returns.

The international financing landscape is also changing. A 2026 World Resources Institute study estimated that 14 economies outside the traditional group of climate finance contributors provided or mobilised approximately US$102 billion between 2013 and 2023. Yet even with this growing diversity of contributors, the gap remains substantial. CPI estimates that climate investment needs will average approximately US$7.8 trillion annually through 2030 to support climate-aligned development. The challenge is not simply that investment must grow, it must also reach different sectors and geographies, through financing arrangements suited to their needs.

Who receives the money, and under what conditions?

One of the clearest imbalances concerns adaptation.

The UN Environment Programme’s Adaptation Gap Report 2025 estimates that developing countries will require US$310–365 billion annually for adaptation by 2035. Yet international public adaptation finance reached just US$26 billion in 2023, below the previous year’s level. Although these figures refer to different years and financing measures, their scale illustrates the persistent mismatch between adaptation needs and available support.

Financing conditions matter just as much as funding volumes.

A Carbon Brief and Guardian investigation into international climate finance found that more than half of the US$33.4 billion provided to least developed countries in 2021–2022 came as loans. Loans can be appropriate for revenue-generating investments, but they may also increase debt pressures, especially when countries must borrow to protect communities from climate impacts they contributed relatively little to creating. The report also illustrates why large infrastructure projects tend to attract substantial funding. They often have established financing structures, measurable outputs and relatively predictable returns.

Community-based adaptation, ecosystem restoration and locally led resilience initiatives may offer enormous public benefits without generating equivalent commercial revenues. This brings us to a fundamental question: Should the success of climate finance be measured primarily by the volume of investment mobilised, or by the climate and development outcomes it delivers?

From available capital to investable climate action

At the January Learning Forum, Ayumi Konishi of MCDF (Multilateral Cooperation Center for Development Finance) emphasised the importance of examining finance alongside the projects it intends to support. He challenged participants to consider whether the financing gap might also reflect a shortage of well-prepared, high-quality and bankable climate projects. This means that money cannot produce climate outcomes without institutions, credible proposals and the ability to translate investment into implementation.

Zsofia Kovacs expanded this discussion by identifying barriers that prevent private investment from reaching developing economies. These include information gaps, perceived investment risks, currency mismatches, high capital costs and institutional constraints. Her presentation highlighted the potential of blended finance, combining public and concessional resources with private capital to make appropriate investments more attractive.

Indonesia’s experience, presented by Prama Wiratama, offered a practical illustration of how governments can mobilise finance beyond conventional budgets. He discussed the country’s use of green sukuk, carbon pricing, fiscal incentives and its Danantara investment institution to support climate-related investment.

Joel Mangahas, a development consultant who previously worked with international development banks and academia, stressed that multilateral development banks are more than financing institutions. Through technical assistance, policy reform, guarantees and investment planning, they can help governments translate nationally determined contributions (NDCs) into programmes that can be implemented.

Taken together, these perspectives suggest that climate finance is fundamentally a governance challenge. However, improving bankability alone cannot address every financing need. Some interventions deliver significant social and environmental benefits but limited financial returns. Such projects may require grants, public investment or highly concessional financing rather than commercially structured debt. The challenge here is to match financial instruments with public priorities, not to reshape every climate priority into an investment product.

COP31: From financial commitments to delivery

In 2024, COP29 established a new goal to mobilise at least US$300 billion annually for developing countries by 2035, alongside a broader call to scale up public and private finance to US$1.3 trillion per year.

At COP30 in Belém, governments called for accelerating action towards the US$1.3 trillion goal and at least tripling adaptation finance by 2035.

The subsequent Baku-to-Belém Roadmap identifies five areas for action: concessional finance, debt sustainability, private investment, institutional capacity and reforms to international financial systems. These commitments offer a framework for COP31, but delivering them requires difficult decisions.

1. First, finance needs clearer delivery pathways. Commitments should be accompanied by credible timelines, transparent reporting and greater clarity about the contributions expected from different financing sources.
2. Second, the quality of finance must improve. Grants, concessional loans, guarantees and private investment serve different purposes. Climate-vulnerable countries need financing that reflects their fiscal circumstances and adaptation requirements.
3. Third, access must become easier. Strengthening national and local institutions, simplifying application processes and supporting project preparation can help countries and communities access available resources.

COP31 will also advance the Veredas Dialogue, examining how wider financial flows can become consistent with the Paris Agreement while complementing developed countries’ climate finance obligations. These discussions matter because the challenge extends beyond mobilising new climate funds. Financial systems must also avoid reinforcing investments that undermine climate goals.

According to UNEP’s Emissions Gap Report 2025, existing policies put the world on a trajectory towards approximately 2.8°C of warming this century. Even fully implemented national climate pledges would imply around 2.3–2.5°C. Climate finance must therefore support faster emissions reductions alongside the adaptation and resilience investments needed to manage increasingly severe impacts.

What can non-Party actors do?

Governments negotiate climate agreements, but universities, businesses, financial institutions, civil society organisations, and communities also influence whether commitments become meaningful action.

1. Build stronger project pipelines. Researchers, local governments and civil society can help turn national climate plans into costed, evidence-based initiatives. This includes identifying local priorities, developing investment proposals and ensuring affected communities participate in project design.
2. Improve accountability for finance. Research institutions and civil society can track not only announced commitments but also disbursements, financing terms, beneficiaries and outcomes. Better public information can reveal where finance is working and where barriers persist.
3. Strengthen partnerships and investment practices. Businesses and financial institutions can integrate climate considerations into investment decisions, support locally appropriate financing arrangements and work with public institutions to address genuine risks. Development partners can provide the technical assistance needed to strengthen delivery capacity.

Non-Party actors can also bring practical evidence into COP discussions, particularly by documenting barriers experienced by local institutions and communities that rarely have direct access to international financing negotiations. They can also work together to create campaigns to pressure governments to act immediately to finance key areas that needs support. Call to action in this case can extend to leveraging personal connection with parties involve in the negotiation, to amplifying the call to action through public mobilisation.

Beyond the numbers

The expansion of climate finance is encouraging, but investment growth alone will not guarantee progress towards the Paris Agreement.

The next phase requires greater attention to where money flows, which needs remain underserved, how financial risks are shared and whether investments produce meaningful climate and social outcomes.

The January Better Climate Governance discussions remind us that climate finance is not merely a question of raising capital. It is about building the institutions, partnerships and financing systems capable of turning resources into action.

As COP31 approaches, success should be judged not only by the financial commitments announced, but by whether they make climate action more accessible, effective and equitable.

The world needs more climate finance, but it also needs better climate finance.