International leaders in developing nations need to innovate and seek financing options for addressing climate change, as funding from global sources appears to be diminishing, according to the CVF-V20 chief.
In the face of a restrictive global funding environment, developing countries are exploring innovative strategies to secure climate adaptation financing beyond traditional multilateral negotiations.
At the recent meeting of the Fund for Responding to Loss and Damage (FRLD) board in Cebu, Philippines, least developed countries demanded a rapid disbursement of emergency funds for natural disasters. This call comes as the FRLD, established at COP27 and hosted by the World Bank, prepares for its first disbursement next year.
Philippines board member representative Mark Joven expressed concern that rich country board members are pushing for a project financing-based mode of disbursement for the loss and damage fund. Joven argued that loss and damage funding should go directly into a recipient country's general budget and require rapid disbursement modalities.
Liz Thompson, Sherpa of the Climate Vulnerable Forum and Vulnerable 20 group (CVF-V20), echoed Joven's sentiments. Thompson, appointed by Barbados prime minister Mia Amor Mottley to be her Sherpa for the CVF-V20, stressed the importance of finding new ways to access finance.
One approach being pursued is the establishment of country platforms to attract international investment. Countries like India, Brazil, Kenya, South Africa, and Barbados are creating these platforms to target climate and environmental priorities, moving beyond traditional aid models towards investment-driven financing.
Another initiative is the Adaptation Fund, which allows developing countries full ownership of climate adaptation projects. With USD 1.39 billion allocated to 199 projects benefiting over 45 million people by 2025, the Adaptation Fund emphasizes transparency, monitoring, and direct country control from project planning through implementation.
Several funds cater to adaptation financing, including the Kyoto Protocol’s Adaptation Fund, the Least Developed Countries Fund (LDCF) and Special Climate Change Fund (SCCF), and the World Bank’s Pilot Program for Climate Resilience (PPCR). However, adaptation financing remains fragmented and often embedded in broader development funding, making targeted impact difficult.
The FRLD, designed to provide grants for emergency disaster relief, infrastructure rebuilding, and resilience projects for countries particularly vulnerable to climate change damage, represents a significant step toward pre-arranged finance for climate disasters. Operational details and eligibility criteria are still being finalized.
Private sector investment in adaptation finance is also growing, with USD 5.7 billion recorded in 2025 from private sources directed toward adaptation investments. This highlights the increasing role of market-based finance in supplementing public funds.
Since its launch in COP27, the Global Shield against Climate Risks, developed by the CVF-V20, has already paid out close to US$2 million to Ghana when it experienced extreme drought in 2024.
The next board meeting will be held in Clark, Pampanga in the Philippines in September. As the FRLD prepares for its first disbursement, the focus remains on ensuring rapid and effective disbursement mechanisms to help climate-vulnerable developing countries respond to historical and impending losses and damages.
Adao Soares Barbosa, board member from Timor Leste, requested the Secretariat develop a proposal for a rapid disbursement proposal under the Barbados Implementation Modalities, in response to a funding request from a country and in absence of pre-approved plans.
Cheng Pagulayan, climate justice portfolio manager of nonprofit Oxfam Pilipinas, expressed concern that the operationalisation of the BIM might be delayed, potentially making it difficult for the fund to raise more resources to respond to loss and damage.
As the climate crisis continues to unfold, developing countries are showing resilience and innovation in their pursuit of climate adaptation financing. However, challenges remain regarding fund adequacy, governance, and clear eligibility, necessitating continued innovation and international cooperation.
- The Least Developed Countries demanded a rapid disbursement of emergency funds for natural disasters at the FRLD board meeting, concerned about a project financing-based mode of disbursement.
- Liz Thompson, representing the Climate Vulnerable Forum and Vulnerable 20 group, stressed the importance of finding new ways to access finance, especially climate adaptation finance.
- One approach being pursued is the establishment of country platforms to attract international investment, moving beyond traditional aid models towards investment-driven financing.
- The FRLD, designed to provide grants for emergency disaster relief, infrastructure rebuilding, and resilience projects, represents a significant step toward pre-arranged finance for climate disasters.
- As the climate crisis continues to unfold, challenges remain regarding fund adequacy, governance, and clear eligibility, necessitating continued innovation and international cooperation in climate-change policies and environmental-science funded by climate finance and politics.
