MDB climate finance figures don’t add up (for developing countries)
Multilateral development banks have announced that their funds for climate action rose by 10% in 2024 compared to the previous year. Closer analysis shows concerns about transparency on how this finance is being used, ongoing support for fossil fuel projects, a focus on loans rather than grants, and a continuation - despite evidence of failures - of private sector first approach.
At COP28, the world agreed to transition away from fossil fuels. Climate finance was at the heart of discussions at COP29 where Global North governments failed to uphold their responsibility to provide sufficient public finance for developing countries to pursue green pathways whilst adapting to already extreme climate impacts.
As the impacts of the climate crisis intensify across the world, rich countries have slashed their budgets for climate action and overseas aid, while Global South countries that have contributed the least to climate change demand increased finance for climate as agreed under the Paris Agreement.
Expanding climate finance will remain on the agenda for COP30 in November. MDBs have been handed a bigger part in provisioning climate finance as Global North countries repeatedly look for ways to side step climate responsibilities. MDBs meanwhile face repeated calls for reform to ensure accountability, transparency and democratic governance.
Finance and accountability experts from civil society comment on the MDB announcement:
Rebecca Thissen, Climate Action Network International
While MDBs report record flows of USD 137 billion in climate finance, this masks a deeper problem: MDBs are still not fit for purpose when it comes to delivering climate justice. Too reliant on loans that drive debt, promoting private sector approaches and skewed toward profitable mitigation projects while adaptation lags behind. The recent NCQG decision left loopholes wide open, letting MDBs inflate numbers without real accountability. The real priority for COP30 is to chart a course to deliver public finance at scale, with developed countries honoring their commitments under Article 9.1 of the Paris Agreement, and a stronger role for UNFCCC climate funds — the more democratic, needs-driven alternative that frontline communities can trust.
Shereen Talaat, MENAFEM
MDBs announce record climate finance, but the quality of this finance matters. Loans, private flows, and green conditionalities cannot replace the public grant-based finance that Global North countries owe under the Paris Agreement. As we head to COP30, MDB governance, fossil finance, and transparency must be addressed to ensure finance truly serves frontline communities in the Global South.
Bhekumuzi Bhebhe, Africa Finance Watch
The announcement of record MDB climate finance is welcome, especially given the concluded Africa Climate Summit. But as African leaders made clear in Nairobi, finance alone is not enough. A truly Just Transition for Africa must be grounded in dignity, equity, and fairness, not in repackaged extractivism. Climate finance must align with African priorities, expanding energy access, supporting local industries, and enabling a leap toward renewable-powered, inclusive industrialisation. Africa is not asking for charity, we are demanding partnership. Because finance without fairness is fragility, and Africa is no longer waiting to be invited to the future we are building it now.
Petra Kjell Wright, Recourse
The MDBs are yet again congratulating themselves on ‘record’ climate finance, but they're still fudging the figures. In 2024, the MDBs counted obscure fossil fuel linked indirect investments, destructive mining and even airport projects as 'climate finance', contributing to the inflated total. Much of this finance is also not truly additional, but rebadged from existing flows. Debt creating loans continue to dominate, as in 2024 just 5% was grants - this is unacceptable for public finance meant to address a crisis not of the Global South's making. And again, Europe received the highest share of MDB climate finance, over three times more than Sub-Saharan Africa, proving that the funds are still not reaching those most vulnerable to climate change.
Jon Sward, Bretton Woods Project
The rapid growth of MDBs’ climate finance in recent years raises questions about both the quality and transparency of this financing. In the case of the World Bank, a growing proportion of its claimed climate finance flows through its policy-based lending instrument, Development Policy Financing (DPF), even though this is non-earmarked budget support which doesn’t go to ‘green projects’, but is rather linked to specific reforms. With limited evidence that these reforms support ‘climate positive’ outcomes, and no requirement to consult with civil society on DPF agreements, civil society is concerned that this greenwashes business as usual practices.
Sophie Richmond, Big Shift Global
MDBs continue to finance billions of dollars in fossil fuels. They cannot be considered a legitimate conduit for climate finance while they are still fossil bankers. MDB loans are not the solution for a just energy transition for developing countries. MDB climate finance is being used by wealthy governments as a distraction to avoid paying the climate finance they owe to the Global South.