A Systems Approach to Accelerating Climate Finance: Exploring Methods and Approaches to Systems Thinking in Climate Finance

The research paper advocates for a systems approach to climate finance to move beyond linear data tracking and address the complexities of developing country financial markets. It introduces a framework that categorizes actors into public finance, private finance, systemic enablers, and service providers, mapping their interrelationships through financial flows, mandates, and information. The paper identifies systemic trends in developing countries—such as bank dominance, short-termism, and capital volatility—and demonstrates how specific systemic actions (like ESG disclosure mandates) can catalyze private finance. Finally, it uses social network analysis of 2013-2014 data to identify key influencers and connectors within the international public finance sub-system to improve coordination.

• Developing country financial systems are heavily dominated by banks, which hold between 85% and 90% of financial assets, and are characterized by significant short-termism, with 49% of loans having a tenor of less than one year between 2010 and 2012.
• There is a growing trend of domestic institutional investors in developing countries, with the ratio of assets to GDP for insurance companies, mutual funds, and pension funds increasing by 50% from 22% to 33% between 2010 and 2014.
• Developing countries are increasingly adopting green finance policies, with approximately 50% of financial policy and regulatory measures in green financing located in developing countries.
• The proposed Climate Finance Systems Framework expands traditional actor mapping by including 'systemic enablers' (such as central banks and regulatory agencies) and 'service providers' (such as investment consultants and credit rating agencies) to capture the impact of rules, mandates, and information flows.
• Systemic actions can be categorized into three types: actions following an actor's existing perspective (e.g., central banks researching climate exposure), deployment of new mandates or tools (e.g., regulators altering pension fund mandates), and the use of new financial instruments (e.g., issuing green bonds).
• Regulatory actions, such as requiring banks to disclose environmental and social (E&S) risks, can shift the role of international public finance from providing direct loans to prioritizing capacity support for local banks.
• Social network analysis of 2013-2014 data indicates that while many OECD countries act as 'connectors' with over 10 outgoing financial flow connections, multilateral climate funds generally have less reach, with only one such entity exceeding 10 connections.

APA

Oliver, P., Tonkonogy, B., Wang, D., & Wang, X. (2018). A Systems Approach to Accelerating Climate Finance: Exploring Methods and Approaches to Systems Thinking in Climate Finance. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Methods_Approaches.pdf

Chicago

Oliver, Padraig, Bella Tonkonogy, David Wang, and Xueying Wang. A Systems Approach to Accelerating Climate Finance: Exploring Methods and Approaches to Systems Thinking in Climate Finance. Climate Policy Initiative, 2018. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Methods_Approaches.pdf.

Wikipedia

{{cite report |last1=Oliver |first1=Padraig |last2=Tonkonogy |first2=Bella |last3=Wang |first3=David |last4=Wang |first4=Xueying |title=A Systems Approach to Accelerating Climate Finance: Exploring Methods and Approaches to Systems Thinking in Climate Finance |publisher=Climate Policy Initiative |date=March 2018 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Methods_Approaches.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{oliver2018systems, author = {Oliver, Padraig and Tonkonogy, Bella and Wang, David and Wang, Xueying}, title = {{A Systems Approach to Accelerating Climate Finance: Exploring Methods and Approaches to Systems Thinking in Climate Finance}}, institution = {Climate Policy Initiative}, year = {2018}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Methods_Approaches.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }