PICTURE IMPERFECT

While not all wealthy economies are following in America’s footsteps of withdrawing from Paris climate agreement, many - including Belgium, Canada, Finland, France, Germany, and the UK, as well as the European Union - are tightening their purse strings

- Georgia Hammersley

Brazil has announced plans to launch a $125 billion fund for the protection of tropical forests. It is a key element of the country’s plan to ensure the success of the next United Nations Climate Change Conference (COP30), which Brazil will host. But, at a time when some of the world’s richest economies are slashing their foreign-aid budgets, and the United States is turning its back on climate action altogether, does the world really need another climate fund?

Over the past three decades, more than 60 multilateral funds have emerged to raise financing for climate action in developing countries. Most are small and obscure, leaving around 19 sizable entities - including the Green Climate Fund (GCF), the Global Environment Facility (GEF), the Adaptation Fund (AF), and Climate Investment Funds (CIFs) - that publicly report on their activities.

In theory, each entity serves a worthy purpose, and a few have gained some traction. In particular, the GCF has emerged as the second-largest multilateral provider of grant-based climate finance to the most vulnerable countries (after the World Bank). But, overall, their contributions are underwhelming. In 2021-22, the 19 funds tracked by the UN’s Standing Committee on Finance delivered a mere $3.7 billion - roughly $195 million per fund. That is far less than the $55.7 billion that multilateral development banks collectively provided for climate action, and nowhere near the trillions of dollars that developing economies need annually to close the climate-finance gap.