Key Impact Points:
- 40% of the global population now lives in areas highly vulnerable to climate change, but adaptation financing remains insufficient.
- The current FfD4 draft lacks recognition of countries’ diverse economic, institutional, and climate risk contexts.
- Experts urge a shift from “receiving” finance to “securing access” through tailored and phased financing instruments.
FfD4 Must Move from Generic to Tailored Climate Finance
The 4th International Conference on Financing for Development (FfD4), set for July 2025, is a pivotal moment to reshape how climate finance reaches the world’s most vulnerable nations. With 40% of the global population living in climate-vulnerable zones, ensuring these countries secure access to sufficient and suitable climate finance is more urgent than ever.
Current Language Falls Short
The draft outcome document acknowledges that developing countries should “receive sufficient climate finance.” But critics argue that this framing oversimplifies the challenge.
“The word ‘receive’ seems contradictory in the context of using instruments like carbon finance,” the report states, noting that such tools typically require countries to mobilize finance themselves — often without the necessary infrastructure or capacity.
Moreover, many of the instruments cited — such as catastrophe bonds, biodiversity credits, and carbon markets — are misaligned with the fiscal and institutional realities of least developed countries (LDCs). These tools require regulatory systems and market maturity that many LDCs currently lack.
“High levels of debt and institutional weaknesses make it difficult for LDCs to issue catastrophe bonds… the absence of appropriate regulatory frameworks hinders the implementation of biodiversity credits.”
A One-Size-Fits-All Approach Risks Leaving LDCs Behind
LDCs often struggle to raise adaptation finance domestically due to weak tax systems, high poverty rates, and narrow fiscal space. At the same time, their dependence on external aid makes them vulnerable to shifts in donor priorities.
The report warns that without a tailored and phased approach, efforts to scale private investment or use innovative tools may backfire — further entrenching inequality.
“Developing countries… need to access sufficient and adequate finance… through mechanisms that do not exacerbate their debt burdens.”
What Needs to Change Before FfD4
Stakeholders are urging changes to the FfD4 outcome text to reflect these realities:
- Shift language from “receive” to “have access to” or “secure” finance — emphasizing empowerment and ownership.
- Specify that financing must be delivered via appropriate instruments that respond to national circumstances, needs, and priorities.
- Acknowledge the necessity of a tailored and phased approach to climate finance — especially for countries with constrained capacity or high exposure to risk.
These changes are critical to ensuring that the FfD4 process delivers not just promises, but progress
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