Fostering complementarity: how development and climate financiers can scale up locally led adaptation

This briefing by the Stockholm Environment Institute explores how development and climate financiers can scale up locally led adaptation (LLA) by leveraging complementarity between different funding models, building on community-led development (CLD) legacies, and integrating private sector capital.

• Locally led adaptation (LLA) aims to shift climate finance from top-down models to a paradigm where decision-making power and resources are devolved to local levels. While LLA is established for small-scale efforts, it can also be implemented at larger scales, such as through the World Bank's Financing Locally Led Climate Action (FLLoCA) project in Kenya and the Asian Development Bank's Community Resilience Partnership Program (CRPP).
• Scaling LLA is hindered by misconceptions that it is only small-scale or decentralized, as well as limited demand from governments and a lack of technical capacity among both governments and financiers. Currently, less than 25% of international public adaptation finance is focused on local communities.
• LLA can leverage the legacy of community and local development (CLD) approaches, which have proven effective in improving ownership, transparency, and efficiency, particularly in fragile contexts like the Sahel and the Horn of Africa. Some nations, such as the Philippines and Indonesia, have integrated CLD as primary national service delivery mechanisms.
• LLA provides 'double dividends' by delivering direct resilience benefits—such as climate-smart infrastructure and disaster preparedness—alongside broader socio-economic gains, including food security, job creation, health improvements, and gender equality.
• Different financiers offer complementary strengths for scaling LLA: bilateral financiers provide government-to-government relations and proof-of-concept models; vertical climate funds target the most vulnerable; multilateral development banks (MDBs) integrate models into national systems; and philanthropies enable experimentation.
• The private sector is an underutilized source of LLA finance that can provide risk-tolerant capital through impact investing and blended finance. To unlock this, public financiers can provide first-loss guarantees and risk-sharing mechanisms to make community-level investments more attractive to private investors.
• There is a critical need for more robust evidence on the costs, benefits, and long-term resilience outcomes of LLA compared to top-down approaches. While microfinance is a tool for reaching communities, concerns remain regarding how debt might increase vulnerability.

APA

Browne, K., El-Horr, J., Parviainen, J., & Tenzing, J. (2025). Fostering complementarity: how development and climate financiers can scale up locally led adaptation. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/pdfs/201550/fostering-complementarity-development-climate-financiers-locally-led-adaptation.pdf

Chicago

Browne, Katherine, Jana El-Horr, Janne Parviainen, and Janna Tenzing. Fostering complementarity: how development and climate financiers can scale up locally led adaptation. Stockholm Environment Institute, 2025. https://www.sei.org/wp-content/uploads/pdfs/201550/fostering-complementarity-development-climate-financiers-locally-led-adaptation.pdf.

Wikipedia

{{cite report |last1=Browne |first1=Katherine |last2=El-Horr |first2=Jana |last3=Parviainen |first3=Janne |last4=Tenzing |first4=Janna |title=Fostering complementarity: how development and climate financiers can scale up locally led adaptation |publisher=Stockholm Environment Institute |date=September 2025 |url=https://www.sei.org/wp-content/uploads/pdfs/201550/fostering-complementarity-development-climate-financiers-locally-led-adaptation.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{browne2025fostering, author = {Browne, Katherine and El-Horr, Jana and Parviainen, Janne and Tenzing, Janna}, title = {{Fostering complementarity: how development and climate financiers can scale up locally led adaptation}}, institution = {Stockholm Environment Institute}, year = {2025}, month = sep, url = {https://www.sei.org/wp-content/uploads/pdfs/201550/fostering-complementarity-development-climate-financiers-locally-led-adaptation.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }