A Systems Approach to Accelerating Climate Finance: Needs and Actor Analysis

This research paper analyzes the USD 18-36 trillion climate investment gap in developing countries and identifies key barriers to scaling finance, such as access to capital and investor skill gaps. It evaluates the roles of various public finance actors—including MDBs, bilateral DFIs, and National Development Banks—highlighting that while NDBs provide the largest flows, they often lack risk mitigation tools. The authors recommend that public actors adopt more flexible capital strategies, harmonize standards, and shift from project-specific finance to broader financial system development to better leverage private investment.

• The sustainable infrastructure investment gap in developing countries is estimated at USD 33 trillion until 2030. This is distributed as USD 27 trillion for Upper middle-income countries (UMIC), USD 5 trillion for lower middle income countries (LMIC), and USD 1 trillion for low income countries (LIC).
• Integrating climate resilience, adaptation, and mitigation costs into sustainable development investments results in an investment gap of USD 18-36 trillion, with the most significant needs in water and sanitation, transportation, and power generation sectors.
• Analysis of 132 submissions to the Global Innovation Lab for Climate Finance and the Fire Awards (2014-2016) shows that 73% of ideas focused on mitigation and 28% on adaptation. The most common barriers cited across 35% of all ideas were skill gaps among investors and access to finance.
• Adaptation-focused finance ideas face distinct barriers compared to mitigation; 42% cited a lack of suitable financial services and 36% cited a lack of data to assist investment decision making. Additionally, 58% of adaptation ideas identified technical assistance as the most needed instrument.
• There is a significant gap in access to concessional finance for emerging markets. Of 21 emerging market countries assessed by the IFC with a combined USD 23 trillion climate investment opportunity, only 5 have access to concessional finance through the World Bank's International Development Association (IDA).
• Public climate finance flows from 2013/2014 are dominated by bilateral and multilateral Development Finance Institutions (DFIs) and governments/agencies. In terms of instruments, loans are more prevalent than equity or risk mitigation flows.
• Climate finance flows are heavily skewed toward mitigation (70%), with renewable energy (37%) and transport (17%) being the priority sectors. Geographically, Latin America and the Caribbean is the largest recipient region.
• National Development Banks (NDBs) have the largest climate financing flows due to their large balance sheets and domestic infrastructure responsibilities, but they often lack risk mitigation instruments and adequate access to low-cost capital.
• International public finance actors face several systemic tensions, including trade-offs between development goals and profitability, over-prudence in leveraging capital, and administrative complexities that hinder the use of grants for high-risk innovation.
• To accelerate climate finance, the report recommends that public actors stretch organization-wide targets, increase flexibility in product offerings (such as allowing equity for institutions currently restricted to debt), and shift from a project-finance focus to a financial system development focus.

APA

Oliver, P., Tonkonogy, B., Wang, D., & Wang, X. (2018). A Systems Approach to Accelerating Climate Finance: Needs and Actor Analysis. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Needs_Actors.pdf

Chicago

Oliver, Padraig, Bella Tonkonogy, David Wang, and Xueying Wang. A Systems Approach to Accelerating Climate Finance: Needs and Actor Analysis. Climate Policy Initiative, 2018. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Needs_Actors.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: Needs and Actor Analysis |publisher=Climate Policy Initiative |date=March 2018 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Needs_Actors.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: Needs and Actor Analysis}}, institution = {Climate Policy Initiative}, year = {2018}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2018/03/Systems_Approach_to_Climate_Finance-Needs_Actors.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }