Climate finance: why institutions matter

It’s not just about how much money is available, it’s also about how this is spent. We need to support vulnerable countries to be in the driving seat of how this funding is used.


International climate funds, such as the Green Climate Fund (GCF) and Adaptation Fund, offer a limited but important source of climate finance for LMICs. While small in scale – three-quarters of climate finance flows are in fact from domestic sources – international climate funds are additional, flexible, and cheaper than a comparable loan from a development finance institution (Climate Policy Initiative, 2020). They are also intended to catalyse greater sources of public or private sector financing by piloting innovative new approaches to both climate change mitigation and adaptation. However, accessing these funds is not straightforward and (partly by design) requires governments to strengthen their prioritisation, planning, implementation, monitoring, reporting, and verification functions.

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