The climate finance is one of the central themes of international negotiations on climate change, especially in Conferences of the Parties (COPs) of the United Nations Framework Convention on Climate Change (UNFCCC). At these conferences, governments, companies and organizations discuss how mobilize financial resources on a global scale to tackling the climate crisis.
Faced with ambitious emissions reduction targets and the need for adaptation in the most vulnerable countries, the financing gains prominence – after all, without resources, solutions don't get off the ground.
What is climate finance?
According to the UN, climate finance is the contribution of resources — public, private or hybrid — at a local, national or international level, intended for actions of mitigation and adaptation to the climate change. This includes, for example, the installation of renewable energy systems for small farmers or restoration projects for degraded areas.
Therefore, the climate finance is essential to enable the decarbonization of the economy and accelerate the implementation of climate solutions. For this to happen, it is necessary to ensure that this financing is fair, efficient and accessible. And it is precisely in COPs that these commitments take shape.
Climate finance at COP
To the COPs are the main global negotiation space on the climate change. It is during these events that countries set goals, make commitments and discuss how to finance the transition to a low carbon economy and more resilient to climate impacts.
The climate finance is an agenda that is always present at conferences. But the real milestone is the Paris Agreement, established by 195 countries in COP21, in 2015. It established that developed countries should invest 100 billion dollars per year in measures of combating climate change and adaptation, in developing countries.
However, according to data of Climate Policy Initiative, the average annual volume of climate finance arrived at about US$ 1.3 trillion in 2021/2022 — equivalent to only 1% of global GDP. The value is still well below the US$ 8.1 trillion per year estimated as necessary by the study until 2030.
This highlights important gaps: lack of sufficient resources, access difficulties for the most vulnerable countries and communities, and the need for a fairer and more transparent allocation.
The challenges of COP30
In 2025, the Brazil will host, for the first time, an edition of Conference of the Parties. The COP30 will take place in Belém, in Amazon. The event marks the 10th anniversary of Paris Agreement and the 33 years of ECO-92, which also took place in Brazil and gave rise to the UNFCCC.
As host, the Brazil will play a crucial role in articulating commitments and concrete actions that are in line with the climate urgency. One of the main challenges will be to advance discussions on climate finance — not only for mitigation and adaptation, but also for loss and damage, especially in more vulnerable countries.
A problem we inherited from COP29 It was precisely the need to find a solution for the climate finance. In the established agreement, developed countries made a commitment to mobilize US$ 300 billion per year by 2035, far below the US$ 1.3 trillion requested. The discrepancy was the target of criticism and raised questions that remain open, such as the origin of the resources and the transparency of their application.
More than increasing values, it is necessary structure mechanisms effective, auditable and accessible, especially for the countries and territories most impacted by climate change.
Sources of funding
The climate finance can be mobilized from different sources — public, private, bilateral and multilateral — that act in a complementary way.
Public sources
- National governments, which finance internal or international actions.;
- Multilateral funds, such as the Green Climate Fund (GCF) and the Global Environment Facility (GEF);
- UN mechanisms, such as the Clean Development Mechanism (CDM).
Private sources
- Companies that finance climate actions;
- Families that finance climate action through donations or impact investing;
- Climate loans and credits for sustainable projects.
Bilateral sources
- Organizations founded by a single country, such as banks and development agencies.
Multilateral sources
- Multilateral development banks, such as the Inter-American Development Bank (IDB) and the World Bank
The role of private sector is increasingly relevant, especially in a context in which the government sector has already shown that, alone, does not have sufficient resources to unlock this agenda. To expand private participation, it is essential to ensure a structure of robust governance, with clear strategies, impact metrics and systemic risk assessment. O climate finance It also represents an opportunity for investors seeking sustainable returns aligned with socio-environmental purposes.
Climate finance in practice
THE Sitawi Finanças do Bem works in the development of innovative financial solutions for conserve biodiversity and face climate challenges, combining positive socio-environmental impact with economic sustainability.
We collaborate with organizations and companies and help identify the financial instruments best suited to each territory, biome and reality — unlocking resources through mechanisms such as blended finance, impact investing and REDD+.
Based on economic, financial and socio-environmental analyses, we help transform intentions into structured projects, capable of attract capital, generate real impact and scaling climate solutions.
Do you want to develop a financial solution with a positive impact on people and nature? Talk to us!
