Climate Financing in BRICS: Lessons from Brazil and South Africa

This policy brief examines climate financing mechanisms in Brazil and South Africa, focusing on carbon pricing, green bonds, green taxonomies, and central bank regulations. It argues that these two BRICS nations are well-positioned to lead the Global South in advocating for a reformed global financial architecture—specifically the restructuring of the World Bank and IMF—to ensure more affordable and equitable climate finance for developing economies.

• Developing countries face significant financial barriers to climate action, including a need for an additional $2 trillion annually by 2030 to meet Paris Agreement goals and a disparity where they pay approximately eight times more than developed nations to access finance from multilateral development banks.
• South Africa and Brazil are advocating for the reform of the global financial architecture, specifically targeting the restructuring of the IMF and World Bank to improve the affordability of finance, debt restructuring, and the representation of developing countries.
• South Africa introduced a carbon tax in 2019, currently at ZAR14 190 (approx. $10) per tonne of CO2, but its effectiveness is hindered by exemptions for the coal-based utility Eskom and a projected insufficiency in meeting Nationally Determined Contributions targets even if raised to $20 per tonne by 2026.
• Brazil is developing an Emissions Trading Scheme (ETS) that will mandate emissions reporting for companies emitting over 10,000 tonnes of CO2 annually and impose caps on those emitting over 25,000 tonnes, though the exclusion of the agriculture sector has raised concerns.
• Climate finance for South Africa remains heavily reliant on loans; in 2023, debt financing constituted 75% of all climate finance, and 85% of the Just Energy Transition Partnership (JETP) financing is loan-based.
• Both nations have developed green taxonomies to incentivize climate-resilient investment and prevent greenwashing. South Africa's 2022 taxonomy is voluntary and aligns with the EU's, while Brazil's Sustainable Taxonomy (Taxonomia Sustentável Brasileira) is set to become mandatory in January 2026.
• Central banks in both countries are integrating climate risks into financial regulation: the South African Reserve Bank released guidance on climate-related risk practices for banks in 2023, and Banco Central do Brasil requires climate risk stress testing and restricts loans for projects in the Amazon biome or on Indigenous land.

APA

South African Institute of International Affairs (2025). Climate Financing in BRICS: Lessons from Brazil and South Africa. https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/

Chicago

South African Institute of International Affairs. Climate Financing in BRICS: Lessons from Brazil and South Africa. 2025. https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Climate Financing in BRICS: Lessons from Brazil and South Africa |date=1 September 2025 |url=https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2025climate, author = {{South African Institute of International Affairs}}, title = {{Climate Financing in BRICS: Lessons from Brazil and South Africa}}, institution = {South African Institute of International Affairs}, year = {2025}, month = sep, url = {https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }