Haritima : The Environmental Society Of Hansraj College

Funding Our Future: The Climate Financing for Sustainable Tomorrow

Climate change is one of the most pressing issues of our time, and addressing it requires significant financial resources. So, Climate financing has gained global attention. Climate finance refers to local, national, or transnational financing – drawn from public, private and alternative sources of financing – that seeks to support mitigation and adaptation action that will address climate change. Climate finance is needed for mitigation because large-scale investments are required to significantly reduce emissions. 

The Urgent Need for Climate Financing

Climate change poses an imminent threat to our planet’s ecological balance and human well-being. According to the latest assessment by the Intergovernmental Panel on Climate Change, global mean surface temperature rises 1.1° Celsius in the 2011-2020 decade if compared with the 1850-1900 period. The average rate of temperature has risen faster since 1970’s decade. It was due to an increase in GHG concentration (Greenhouse Gases) since 1750. The IPCC report shows that – Net 𝐶𝑂2emission from 1850 to 1989 were 2400240 Gt 𝐶𝑂2, which is more than half around 58% of the total emission from 1850 to 2019, almost 42% emission occurred within three decades (1989-2019).

These have a direct effect on our environment and humans as well – increase in temperature causes species loss, increase in the mean sea level rise can submerge the coastal land areas, retreating glaciers, disturbance in ecosystem etc. So, finance, technology and international cooperation are critical for accelerated Climate action.

International Agreements and Commitments

The International community recognized the gravity of climate change and has come together through agreements and commitments to address the global challenge. The cornerstone of global climate action is the United Nations Framework Convention on Climate Change (UNFCCC), established in 1992, which has objective to stabilize Greenhouse Gas concentration on a certain level. Convention calls the onus on Developed Countries – as they cause most of GHG emission in the past. It directs new funds to climate change activities in Developing Countries, Developed Countries agreed, and Global Environment Facility established for ensuring climate financing. The initiative for climate finance is also seen in the Kyoto Protocol, where we can see Adaptation Fund established for the same.  

Climate Financing Mechanism

Climate financing is channeled through various mechanisms to fund projects and initiatives aimed at mitigating climate change and enhancing resilience to its impacts. One of the key players in this arena is the Green Climate Fund (GCF), established under the UNFCCC in 2010, to channel funds from developed countries to developing countries to help them reduce Greenhouse Gas emission and providing technology for efficiency in production without emission. It generates loans and grants for public sector projects, the procurement method varies according to the value or nature of the fund. They acquire funds and donations from public to private and from local to international level.

 The Role of Private Institutions

In the battle against climate change, the private sector has emerged as a formidable force for positive change. Businesses, ranging from small startups to multinational corporations, are increasingly recognizing the need to integrate sustainable practices into their operations. 

The International Finance Corporation (IFC), a member of the World Bank group, plays a pivotal role in mobilizing private sector investment for climate related projects. The IFC works under ESG (environment- social- governance) principle to grow green bonds and other debenture instruments that promote sustainability, to give emerging economies the financing they need to meet climate targets.

Prospects and Recommendations 

The trajectory of climate financing will play a crucial role in determining the success of our collective efforts to combat climate change. Several key areas warrant attention to ensure that climate financing remains effective and impactful. 

  • First, Nations and international organizations must continue to scale up their commitments to climate financing. 
  • Second, transparency in the allocation and utilization of climate funds is paramount. 
  • Third, while mitigation efforts are crucial, equal attention must be given to adaptation and building resilience in vulnerable communities. This includes investing in climate-resilient infrastructure, early warning systems, and sustainable agricultural practices.
  •  Fourth, continued investment in research and development is essential for developing innovative technologies and practices that can accelerate climate action. This includes supporting research in renewable energy, carbon sequestration, and climate-smart agriculture.


Climate Financing is indispensable in our battle against climate change. To achieve our climate goals, nations, international organizations, and the private sector must collaborate, mobilize resources, and address challenges head-on. It is because climate change has impact not only one but on everyone, so each of us must come together for the betterment of our future. The commitment to securing a sustainable future for our planet lies in our ability to finance the solutions needed to combat climate change. 

-Shivam Aashish

Sources and References:

  1. Introduction to Climate Finance | UNFCCC
  2. IPCC_AR6_SYR_SPM.pdf
  3. What is the United Nations Framework Convention on Climate Change? | UNFCCC
  4. What is the Kyoto Protocol? | UNFCCC
  5. Information disclosure | Green Climate Fund
  6. IFC’s Strategic Alignment with the Sustainable Development Goals (SDG)
  7. The Climate Finance Architecture the World Needs | World Resources Institute (wri.org)
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