The Impact of COVID-19 on Climate Finance and Green Development

The document examines the disparity in green finance between developed and developing nations, noting that while the EU and other developed markets have integrated substantial green recovery measures into their COVID-19 stimulus packages, developing countries often lack explicit green budgets and remain heavily dependent on North-South financial flows. It highlights challenges in the global South, including infrastructure deficits, governance issues, and a 'dependency syndrome' regarding international aid. The brief recommends institutional reforms to enhance capital markets, increased South-South cooperation, and globally coordinated efforts to improve the design and monitoring of green projects.

• There is a significant gap between the financial resources required for a low-carbon transition and actual climate finance flows. The Intergovernmental Panel on Climate Change estimates a need for between $1.6 trillion and $3.8 trillion annually from 2016 to 2050, while recorded flows were $612 billion in 2017 and declined by 11% to approximately $546 billion in 2018.
• Developed markets, particularly in Europe, the US, and Japan, have established mature green finance ecosystems using environmental, social and governance (ESG) criteria. For instance, sustainable investments in Europe reached approximately $31 trillion by 2018, and US-domiciled assets using sustainable strategies grew to $12 trillion by the start of 2018.
• COVID-19 recovery packages in the EU explicitly prioritize green development, whereas most developing countries did not. The EU's initial EUR 750 billion proposal allocated 25% to climate-friendly measures, and France's EUR 100 billion stimulus package allocated one-third to green measures. In contrast, Kenya's KSH 54 billion relief package did not specify an amount for green development.
• Green finance in the global South is characterized by a heavy reliance on external North-South flows, such as foreign direct investment (FDI) and international aid, rather than South-South cooperation. This is evidenced by the Africa's Climate Change Fund (ACCF), where the main contributors in 2019 were European entities like GIZ and the Government of Flanders.
• Developing countries, particularly in sub-Saharan Africa, face severe infrastructure financing deficits that hinder climate resilience. Only 10 of 54 African countries provide adequate meteorological services, and fewer than 300 weather stations meet World Meteorological Organization standards.
• Emerging market economies (EMEs) like Brazil face governance and implementation hurdles despite the potential for green growth. While a low-carbon recovery in Brazil could potentially create 2 million jobs and increase GDP by $535 billion by 2030, limited implementation capacity and political prioritization of social services over environmental programs hamper progress.

APA

South African Institute of International Affairs (2021). The Impact of COVID-19 on Climate Finance and Green Development. https://saiia.org.za/research/the-impact-of-covid-19-on-climate-finance-and-green-development/

Chicago

South African Institute of International Affairs. The Impact of COVID-19 on Climate Finance and Green Development. 2021. https://saiia.org.za/research/the-impact-of-covid-19-on-climate-finance-and-green-development/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=The Impact of COVID-19 on Climate Finance and Green Development |date=19 May 2021 |url=https://saiia.org.za/research/the-impact-of-covid-19-on-climate-finance-and-green-development/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2021impact, author = {{South African Institute of International Affairs}}, title = {{The Impact of COVID-19 on Climate Finance and Green Development}}, institution = {South African Institute of International Affairs}, year = {2021}, month = may, url = {https://saiia.org.za/research/the-impact-of-covid-19-on-climate-finance-and-green-development/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }