Climate finance: What it is, how it's mobilised, assessed and monitored

What is Climate Finance? 

Climate finance refers to local, national or transnational financing drawn from public, private or alternative sources of financing that seek to support mitigation and adaptation actions that will address climate change. 

How it's mobilised, assessed and monitored

There are various international financial mechanisms and funds which have been created to make finance available for climate action according to the commitments made in the Paris Agreement.

These mechanisms or funding bodies generally receive funds from developed countries or agencies and allocate finances and resources of climate-related projects, often intended for developing countries.

The Process of Acquiring Climate Finance

Countries or large organizations would need to apply and become accredited with these funding bodies and or submit proposals for projects which would then be approved before entering into a financial agreement. This process can be long and complicated, making it difficult for developing countries to access the funds they need to take climate action.

The Need for More Accessible Financing Mechanisms

International civil society have campaigned for more accessible financing mechanisms as well as increased, unconditional funds for emergency situations and losses and damages from extreme weather events. These funds would be easier for developing countries to access and would help them to better prepare for and respond to the impacts of climate change.

UNFCC's Assessment of Climate Finance

Under the UNFCC, a comprehensive assessment of climate finance is conducted every two years. These reports typically assess the amount of funding directed to climate-related projects, the sources of finance (such as public, private, domestic or international sources), and the sectors or regions where the funds are allocated.

These assessments play a crucial role in understanding the scale and effectiveness of climate finance efforts, tracking progress towards climate goals and identifying gaps or challenges in financing climate action. They can serve as a basis for policy discussions, strategic planning and decision making processes related to climate finance at international, national or sub-national levels.

The Need for Transparency and Accountability

However, civil society organizations have highlighted the amounts of climate finance reported are overstated and sometimes grossly misused. The true value of climate finance disbursed could only be one third of what was reported between 2017 -2018 and commitments to mobilize $100 billion per year by 2020 have still not been met in 2023.

Posing questions around the monitoring and evaluation of climate finance to institutions and bodies charged with the mobilization and processing of finances is an example of how organizations can be involved in demanding transparency and accountability of climate finance.

The international financial mechanisms and funds for climate action are an important part of the global effort to address climate change.

However, there are still challenges to overcome, such as the need for more accessible financing mechanisms and the need for greater transparency and accountability. By working together, we can ensure that these mechanisms are used effectively to support climate action around the world.