Since the Paris Agreement in 2015, countries have committed to mobilizing US$ 100 billion per year to support sustainability projects in developing countries. The goal included not only financial resources, but also technology transfer and technical support so that emerging economies could adapt to the impacts of climate change and reduce their greenhouse gas (GHG) emissions.
This commitment gave rise to the concept of climate finance, which has become one of the central axes of global climate governance. But an essential question arises: How can we ensure that this money reaches the end, to those who truly protect and care for the environment?
What is climate finance?
According to the United Nations Framework Convention on Climate Change (UNFCCC), climate finance is any resource — local, national or transnational — from public, private or alternative sources, intended to support actions to mitigation (reduction of gas emissions) and adaptation (preparing for and responding to climate impacts).
In practice, this can mean anything from the support for small farmers in installing renewable energy, until the restoration of degraded areas, going through the creation of resilient infrastructures or by clean technology financing.
In short, it is an essential mechanism for:
- Reduce global GHG emissions;
- Reduce the vulnerability of communities and ecosystems;
- Increase resilience to extreme weather events.
Climate finance overview
Efforts to organize and develop the climate finance have been an agenda in international climate governance since Eco-92, held in Rio de Janeiro in 1992. Also known as the Earth Summit or officially as the United Nations Conference on Environment and Development, this conference is a milestone in fight against climate change. It was the first to bring together governments, civil society and the private sector on a large scale to establish measures aimed at tackling the increase in greenhouse gas emissions.
But the real milestone for the climate finance was the Paris Agreement, established by 195 countries at the 21st Conference of the Parties (COP21) in 2015. This agreement committed to immediately reducing global greenhouse gas (GHG) emissions with the aim of keeping global temperature rise well below 2°C and, ideally, limiting the rise to 1.5°C.
Still, according to Climate Policy Initiative report, the average annual volume of climate finance reached about US$ 1.3 trillion in 2021/2022, which corresponds to 1% of global GDP. This value is significantly below the approximately US$1.4 trillion estimated to be needed annually by 2030.
In this sense, it is clear that, despite the efforts made, there are significant challenges associated with climate financeThese include mobilizing sufficient resources to achieve established climate goals, prioritizing resource allocation, and distributing funds fairly, effectively, and transparently.
Sources and forms of financing
The climate finance can have different origins and formats.
Where does the money come from?
- Public funds: national governments, which allocate resources both for internal actions and to support more vulnerable countries, through bilateral or multilateral mechanisms.
- Private funds: companies, investors and families that invest resources in climate projects, whether through donations, loans or impact investments.
How is it used?
- Grants: non-refundable resources (donation) to support strategic projects;
- Concessional loans: credits with favorable payment conditions, often with low interest or extended terms;
- Business investments: capital allocated in exchange for participation in future projects or profits.
Who receives?
- Developing countries, which require external support to implement climate measures.
- Sectors in transition, such as industries that need to migrate from fossil fuels to renewable energy.
- Local communities and traditional peoples, often those most impacted by the effects of the crisis and, at the same time, the main guardians of strategic ecosystems.
COP 30 and climate finance
In 2025, Brazil will host a World Cup for the first time. Conference of the Parties: the COP30, in Belém, in the heart of the Amazon. The event marks the 10th anniversary of the Paris Agreement and the 33rd anniversary 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 articulation of commitments and concrete actions commensurate with the climate emergency. 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.
One problem we inherited from COP29 was precisely the need to find a solution for climate finance. In the agreement, developed countries committed to mobilizing US$1.5 trillion annually by 2035, well below the requested US$1.3 trillion. The discrepancy was criticized and raised questions that remain open, such as the origin of the funds and the transparency of their use.
More than increasing values, it is necessary structure effective, auditable and accessible mechanisms, especially for the countries and territories most impacted by climate change.
Climate justice: those who suffer the most are those who pollute the least
The climate crisis does not affect everyone equallyCountries and populations in the Global South, responsible for a tiny fraction of historical emissions, are those most impacted by droughts, floods, extreme events, food insecurity, and forced displacement.
Speaking of climate justice is to recognize that financing must prioritize who protects and who resists — traditional, indigenous, quilombola, riverside, and peripheral communities. They are on the front lines of environmental protection, but they continue to be those with the least access to resources and the most impacted by their effects.
Who really needs the feature?
Even with advances in climate finance —such as the creation of funds and arrangements between governments, companies, and philanthropic organizations—resources are still insufficient. And when it comes to supporting community organizations, social movements, and local leaders, these resources become even scarcer.
To face this challenge, it is essential that resources reach these communities more directly, instead of focusing only on large projects. The philanthropy can play a central role in this process, helping to democratizing access to financing and strengthening adaptation and ecological transformation in the territories.
Today, access to climate finance International funding is quite limited for community organizations. Small groups cannot directly access these funds, which usually enter countries through intermediaries, who group smaller projects into larger proposals that meet international criteria.
However, if we truly want to combat climate change, it is essential to raise our ambition: Transferring more funds, faster, to the places that need them most.. And to do so in a coherent manner, recognizing that the climate emergency is directly linked to social inequalities and the defense of human rights.
How to put it into practice?
The urgency and complexity of the climate crisis demands new forms of financing, capable of providing effective solutions to conserve nature and face environmental challenges.
THE Sitawi Finanças do Bem develops innovative financial solutions that combine positive socio-environmental impact and economic sustainabilityOur goal is to identify the most appropriate instrument for each biome and local reality, ensuring that the resources generate concrete transformations.
At the climate finance, We operate using mechanisms such as REDD+, transforming these opportunities into real benefits for people and nature. This includes the implementation of socio-environmental safeguards and the creation of benefit-sharing fundsWe also combine government, private, and philanthropic resources, exploring different avenues for investing in nature and generating positive environmental and financial results.
We collaborate with organizations and companies to design solutions that unlock capital through mechanisms such as blended finance, impact investing, territorial programs and REDD+. Based on economic, financial, and socio-environmental analyses, we structure solid, customized projects capable of attracting investment, scaling climate solutions, and generating real impact in the regions.
If you or your organization want to understand how to mobilize resources and implement financial solutions to address the climate crisis, talk to us!
