Frontiers of change: collaborative finance for climate resilience

The document highlights a critical funding gap in frontier markets, noting that least developed countries (LDCs) receive only 3% of global climate finance despite high vulnerability. It argues that current investment is hindered by high perceived risks and small transaction sizes, which often fall below the thresholds of Development Finance Institutions (DFIs). To address this, the text proposes a shift toward an 'Impact Capital Continuum' and the use of blended finance tools—such as first-loss guarantees and results-based financing—to de-risk investments. It cites SokoFresh in Kenya as a successful example of how a grant and technical assistance can scale solar-powered cold storage to increase farmer incomes. The document concludes by supporting the World Economic Forum's Humanitarian and Resilience Investing (HRI) Initiative in calling for a coalition to align resources and share investment pipelines.

• Frontier markets, specifically least developed countries (LDCs), experience a disproportionate share of climate-related deaths and a severe lack of climate finance, receiving only 3% of the global total.
• Investment in frontier markets is blocked by high perceived risks, fragmented ecosystems, and transaction sizes that are too small for institutional investors; for example, most SMEs in LDCs require investments of €0.5 million or less, which is typically unviable for DFIs.
• Blended finance mechanisms, including results-based financing and first-loss guarantees, are proposed as essential tools to de-risk investments and attract private capital to frontier markets.
• A case study of SokoFresh in Kenya demonstrates that combining a €236,000 grant from the Dutch Fund for Climate and Development (DFCD) with technical assistance for solar-powered cold storage increased smallholder farmers' incomes by 18% over three years.
• The document advocates for a coalition of foundations, donors, development organizations, and investors to align resources and share pipelines, supporting the World Economic Forum’s Humanitarian and Resilience Investing (HRI) Initiative.

APA

O'Connell, S. (2025). Frontiers of change: collaborative finance for climate resilience. World Economic Forum. https://www.weforum.org/stories/climate-action/frontiers-of-change-collaborative-finance-for-climate-resilience/

Chicago

O'Connell, Simon. Frontiers of change: collaborative finance for climate resilience. World Economic Forum, 2025. https://www.weforum.org/stories/climate-action/frontiers-of-change-collaborative-finance-for-climate-resilience/.

Wikipedia

{{cite press release |last1=O'Connell |first1=Simon |title=Frontiers of change: collaborative finance for climate resilience |publisher=World Economic Forum |date=15 January 2025 |url=https://www.weforum.org/stories/climate-action/frontiers-of-change-collaborative-finance-for-climate-resilience/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{oconnell2025frontiers, author = {O'Connell, Simon}, title = {{Frontiers of change: collaborative finance for climate resilience}}, publisher = {World Economic Forum}, year = {2025}, month = jan, url = {https://www.weforum.org/stories/climate-action/frontiers-of-change-collaborative-finance-for-climate-resilience/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }