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

This research paper by the Climate Policy Initiative proposes a systems thinking framework to accelerate climate finance by analyzing the interactions between international public finance actors and domestic financial systems in developing countries. It identifies systemic trends, catalogues the roles of various financial actors, and provides a methodology for mapping system dynamics to optimize coordination and collaboration.

• Developing country financial systems are heavily reliant on banks, which typically maintain short-term lending outlooks. It is estimated that banks hold 85-90% of financial assets in these regions, and between 2010 and 2012, 49% of loans had a tenor of less than one year.
• 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% between 2010 and 2014, rising from 22% to 33%.
• Developing countries are increasingly proactive in implementing green finance policies; approximately 50% of financial policy and regulatory measures in green financing are located in developing countries.
• The paper identifies three types of actions that systemic actors take to influence climate finance flows: actions following an actor's own perspective/focus area, actions deploying a new mandate, method, or tool, and actions utilizing new financial instruments.
• The proposed Climate Finance Systems Framework categorizes actors into four main groups: public finance actors, private finance actors, systemic enablers (such as central banks and regulatory agencies), and service providers (such as investment advisors and credit rating agencies).
• Systemic actions, such as banking regulators mandating the disclosure of environmental and social (E&S) risks, can shift the role of international public finance providers from providing direct loans to prioritizing capacity support for local banks.
• The adoption of new mandates, such as pension funds integrating ESG factors, can create second-order effects that increase climate risk awareness across corporate supply chains.
• Innovative financial instruments, such as the reducing refinancing rates offered by the Bangladesh Central Bank for green projects since 2009, can catalyze new financial flows and signal demand for green products.
• Social network analysis of international public climate finance reveals that while some government and bilateral aid sources have the most reach (outgoing connections), major development banks and climate funds typically hold the most influence (incoming 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} }