What is Climate Finance?

Climate finance refers to funding from local, national, or international sources—whether public, private, or alternative—that aims to support actions for mitigating and adapting to climate change. The United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol, and the Paris Agreement all emphasize the need for financial assistance from wealthier nations to support those less equipped to address the challenges of climate change. This recognizes the significant disparities in countries' contributions to climate change and their capacity to address its impacts.

Climate finance is crucial for mitigation, as substantial investments are necessary to reduce greenhouse gas emissions on a large scale. Equally, adaptation efforts require significant funding to manage and minimize the effects of a changing climate.

Under the principle of “common but differentiated responsibilities and respective capabilities” established by the UNFCCC, developed countries are obligated to provide financial support to developing nations to help them meet climate goals. The Paris Agreement reaffirms these commitments and, also encourages voluntary contributions from other countries.

It is crucial for a balanced focus on both adaptation and mitigation efforts in climate financing. Monitoring progress in providing and mobilizing financial support is part of the global stocktake under the Paris Agreement, which also highlights the importance of transparency and predictability in financial contributions.

Article by ClimAgri Food