Accelerating Sustainable Finance for Emerging Markets and Developing Economies

This report, prepared by an Independent High-Level Expert Group (IHLEG) for the Brazilian G20 Presidency and the G20 Sustainable Finance Working Group, reviews the operations of the Vertical Climate and Environmental Funds (VCEFs)—the Global Environment Facility (GEF), the Adaptation Fund (AF), the Climate Investment Funds (CIF), and the Green Climate Fund (GCF). The review identifies a fragmented global climate finance landscape and recommends a 'process integration' approach to enhance the Funds' collective impact. Key proposals include harmonizing accreditation and reporting, shifting from individual projects to country-driven investment platforms, and expanding the use of diverse financial instruments to mobilize more private and public capital for emerging markets and developing economies (EMDEs) and least-developed countries (LDCs).

• Climate investment in emerging markets and developing economies (EMDEs) and least-developed countries (LDCs) must increase more than fourfold to USD 2.4 trillion per year by 2030 to meet Paris Agreement goals. This requirement includes USD 1.6 trillion for clean energy, USD 250 billion for adaptation and resilience, USD 300 billion for loss and damage, and USD 300 billion for natural capital and sustainable agriculture.
• The global concessional climate finance landscape is highly fragmented, with 180 different entities tracked in 2021/2022, 75% of which provided funding of less than USD 100 million. This fragmentation leads to duplicate actions, high administrative burdens, and inconsistent accounting standards.
• VCEFs have a collective annual commitment capacity of USD 4 billion to USD 5 billion, with the GCF providing approximately half. In 2022, annual disbursements were USD 1.4 billion, with disbursement-to-approval ratios varying significantly from 76% for the GEF to 31% for the GCF.
• The report recommends that VCEFs shift from an individual project approach to supporting country-driven platforms and investment plans. This involves strengthening the leadership of focal points, encouraging cross-fund country focal points, and establishing national climate and environmental investment coordination platforms.
• To increase financial mobilization, VCEFs should deploy a full range of instruments—including grants, concessional debt, guarantees, equity, and local currency products—and ensure flexibility in terms such as pricing, tenor, rank, and security.
• The GCF's accreditation process is described as protracted and costly, with an average of 25 months elapsing between application and Board approval as of December 2023. This process is particularly burdensome for Direct Access Entities (DAEs) and unattractive to private entities.
• The GEF's project portfolio is highly concentrated; in GEF-7, the UNDP, UNEP, and World Bank accounted for 64% of approved funding. Only about 5% of all GEF resources have been channeled through regional and national agencies.
• The report proposes a 'process integration' option as the most feasible way to improve VCEF effectiveness. This involves VCEFs working as a system through 'one-stop shop' solutions, harmonizing accreditation and reporting, and leveraging each Fund's comparative advantages without requiring full structural consolidation.
• VCEFs should establish a joint definition of mobilization and a publicly accessible joint database to distinguish between additional co-financing and business-as-usual parallel co-financing, coordinating with MDB methodologies to avoid duplication.
• The report suggests that the GCF should move Board approval to the concept note stage and delegate final approval to the Executive Director to decrease processing times and increase predictability.

APA

Climate Policy Initiative (2024). Accelerating Sustainable Finance for Emerging Markets and Developing Economies. https://www.climatepolicyinitiative.org/wp-content/uploads/2000/10/G20-IHLEG-VCEF-Review.pdf

Chicago

Climate Policy Initiative. Accelerating Sustainable Finance for Emerging Markets and Developing Economies. 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2000/10/G20-IHLEG-VCEF-Review.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Accelerating Sustainable Finance for Emerging Markets and Developing Economies |date=October 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2000/10/G20-IHLEG-VCEF-Review.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2024accelerating, author = {{Climate Policy Initiative}}, title = {{Accelerating Sustainable Finance for Emerging Markets and Developing Economies}}, institution = {Climate Policy Initiative}, year = {2024}, month = oct, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2000/10/G20-IHLEG-VCEF-Review.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }