GNV News 2025 October 17

On 2025 October 6, the report “Climate Finance Shadow Report 2025” released by Oxfam and the international NGO CARE identified many issues with climate finance (Note 1) supplied to low-income countries. Most public climate finance for low-income countries consists of funding channeled through international financial institutions such as multilateral development banks (MDBs), and bilateral financing such as climate‑focused ODA (official development assistance). However, in 2021 and 2022, 57% of the finance provided by MDBs was non‑concessional lending that must be repaid, increasing the debt burden on low‑income countries. In 2022, climate loans obtained by low‑income countries had to be repaid with up to a 42% markup, amounting to a profit for creditors.

Meanwhile, although ODA budgets—centered on grants and concessional lending—were on an upward trend from 2020 to 2022, cuts of about 9%~17% are expected in 2024・2025 reductions. Moreover, many high‑income countries have not expanded new climate finance; they have merely replaced portions of existing ODA budgets with climate‑focused ODA, meaning truly additional funds are not reaching low‑income countries. In addition, the “Loss and Damage Fund (Note 2)” established at the Conference of the Parties (COP) to the UNFCCC as climate finance for low‑income countries has still not secured most of the amounts pledged at COP28, highlighting a large gap between policy outcomes symbolized by fund establishment at the COP and the actual mobilization of finance.

In 2021・2022, only about 20% of the climate finance contributed by high‑income countries was allocated to the particularly vulnerable so‑called least developed countries (LDCs) and small island developing states (SIDS). Moreover, funding is skewed toward mitigation (such as renewable energy deployment), and support for adaptation sought by LDCs and SIDS has shown a slight decline since 2023. In other words, financing is not necessarily being prioritized for the countries with the highest climate finance needs. Contributions to the Loss and Damage Fund accounted for only 1.2% of total climate finance in 2022.

Mobilizing private finance is also expected, but relevant data and transparency are lacking, making it difficult to grasp the reality. Furthermore, high‑income countries tend to overstate climate relevance and report headline figures that do not account for loan interest repayments, so the actual amounts are lower. The official figures reported by Oxfam and CARE were less than one‑third of the amounts announced by high‑income countries. High‑income countries are being called on to report more transparently and to provide fair and effective climate‑action finance from newly additional funds.

(Note 1) Climate finance refers to funds provided from public, private, and alternative sources at the regional, national, or international levels, intended to support mitigation (reducing greenhouse gas emissions) and adaptation (actions to address the impacts of climate change).

(Note 2) The Loss and Damage Fund is a fund contributed by high‑income countries, grounded in equity and fairness, to enable low‑income countries—despite having the lowest greenhouse gas emissions yet being vulnerable to the adverse effects of climate change—to address economic and non‑economic losses and damages. These losses and damages include those arising from extreme weather events and slow‑onset events.

Learn more about the current state of climate change → “1.5°C exceeded: The reality of global climate challenges, responses, and coverage in Japan”

Learn more about states’ legal responsibility for climate change → “A major step on the climate crisis: Taking it to the ICJ”

Bangladesh suffering devastating flood damage due to the impacts of climate change (Photo: Oregon State University / Flickr [CC BY-SA 2.0])