Strengthening Collaboration to Scale Climate and Development Finance

The report analyzes the complementary roles of VCEFs, MDBs, and NDBs in scaling climate finance, highlighting the potential for financial instruments like guarantees and catalytic equity to mobilize private investment. It identifies systemic barriers—such as complex accreditation and slow approval processes—and proposes a roadmap for non-financial collaboration through country platforms, technical assistance, and the creation of enabling policy environments. The document provides specific recommendations for the G20 Sustainable Finance Working Group to improve interoperability and leverage NDBs' local expertise to bridge the investment gap, particularly for adaptation in low-income countries.

• Multilateral development banks (MDBs) are the primary contributors of co-financing for VCEF projects, providing USD 17 billion between 2019 and 2023, with an average of USD 107 million per co-financed project, mostly via debt.
• There is a systemic investment gap for adaptation compared to mitigation; VCEF dollars leverage five times their value for mitigation projects, but only three times for adaptation.
• Climate finance mobilization is heavily skewed toward middle-income countries (MICs), which received 43% of co-financing and mobilization volumes, while low-income countries (LICs) received only 8%.
• Strategic use of guarantees can be significantly more effective at mobilizing private finance than loans, with the potential to leverage 6-25 times more financing.
• Collaboration is hindered by several operational barriers, including complex and time-consuming accreditation to VCEFs, slow project approvals and disbursements, and a lack of interoperability in due diligence processes.
• National development banks (NDBs) are critical local intermediaries that can align international finance with national priorities and provide local currency financing to mitigate exchange rate risks in emerging markets and developing economies.

APA

Climate Policy Initiative (2025). Strengthening Collaboration to Scale Climate and Development Finance. https://www.climatepolicyinitiative.org/publication/strengthening-collaboration-to-scale-climate-and-development-finance/

Chicago

Climate Policy Initiative. Strengthening Collaboration to Scale Climate and Development Finance. 2025. https://www.climatepolicyinitiative.org/publication/strengthening-collaboration-to-scale-climate-and-development-finance/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Strengthening Collaboration to Scale Climate and Development Finance |date=25 July 2025 |url=https://www.climatepolicyinitiative.org/publication/strengthening-collaboration-to-scale-climate-and-development-finance/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2025strengthening, author = {{Climate Policy Initiative}}, title = {{Strengthening Collaboration to Scale Climate and Development Finance}}, institution = {Climate Policy Initiative}, year = {2025}, month = jul, url = {https://www.climatepolicyinitiative.org/publication/strengthening-collaboration-to-scale-climate-and-development-finance/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }