Climate finance has become one of the central topics in the global climate change discourse. Every Conference of Parties (COP) under the United Nations Framework Convention on Climate Change (UNFCCC) discusses billions of dollars in climate finance and announces new commitments, making pledges and debating on how financial resources should be mobilized.
From COP15 in Copenhagen to COP30 in Brazil, the concept of climate finance has evolved significantly, reshaping both global negotiations and expectations.
The Copenhagen Accord marked a turning point by making a commitment to mobilize $100 billion annually and paving the way for the establishment of the Green Climate Fund (GCF). The Paris Agreement adopted at COP21 in 2015 further institutionalized the climate finance architecture, placing it at the centre of global efforts to support mitigation, adaptation and resilience-building in developing countries. More recently, COP29, widely described as the “finance COP,” adopted New Quantified Climate Goals (NCQG) and agreed to mobilize $300bn per year by 2035.
Yet the outcome also exposed a widening gap between ambition and reality. While developing and least developed countries argued that around $5-6 trillion was required annually to meet the global climate goals, the negotiated amount stood at only $300bn. How these resources will be mobilized, delivered, and accessed remains unresolved.
An uncomfortable question also remains: Has climate finance actually strengthened the resilience of countries like Bangladesh?
The answer is not as straightforward as the volume of funding might suggest.
Much of the climate finance debate continues to focus on how much money is committed or disbursed. Success is often measured in mobilization of millions or billions of dollars, the number of approved projects, or the volume of international funding received.
While these figures are important, they reveal very little about whether climate finance is creating long-term resilience where it matters most.
Although the Paris agreement didn’t mention the word “compensation,” for developed nations, climate finance is considered an obligation arising from historical responsibility for greenhouse gas emissions.
For developing and least developed countries, it is a matter of climate justice, recognizing that those who have contributed the least to climate change are experiencing the worst consequences of climate change.
Even when finance becomes available, accessing funds is rarely straightforward. Climate finance operates through an increasingly complex architecture involving multilateral funds, bilateral agencies, development banks, accreditation processes, fiduciary standards, environmental safeguards, and reporting requirements.
While these mechanisms are designed to ensure accountability and effectiveness, they also increase transaction costs and create significant barriers, particularly for countries with limited institutional capacity.
Climate finance therefore does not move directly from international commitments to the vulnerable communities. It passes through a complex pathway of institutions, governance systems, and political processes before reaching those most vulnerable to climate change.
The gap between the demand and announced amount is not the only problem in the climate finance discussion. Accessing climate finance for the least developed and developing countries is also a challenge for both the capacity gap and the complex mechanism of the climate finance instruments.
The Paris Agreement encourages countries to pursue low-carbon and climate-resilient development. However, for many developing countries, climate action cannot be separated from broader development priorities.
Governments must simultaneously reduce poverty, create employment, expand infrastructure, strengthen health and education systems, and improve food security. Accessing funds remains a major challenge for many countries like Bangladesh which are the world’s most climate-vulnerable countries.
Bangladesh has emerged as one of the more pro-active countries in strengthening climate governance. Over the past decade, Bangladesh has established an impressive policy architecture, including the Bangladesh Climate Change Strategy and Action Plan, the National Adaptation Plan, and the Delta Plan 2100. Climate considerations are increasingly integrated into national planning and budgeting systems, while institutions responsible for climate governance have continued to evolve.
However, Bangladesh continues to seek enormous investment requirements for climate adaptation, resilient infrastructure, disaster risk reduction, renewable energy, urban development, and climate-induced displacement. These investments are essential not only for responding to climate change but also for boosting economic growth and improving living standards.
The challenge is therefore much broader than accessing climate finance. Bangladesh is expected to achieve low-carbon development while continuing its journey towards upper-middle-income status.
It must invest in clean energy while ensuring affordable electricity for industries and households. It must strengthen climate resilience while expanding infrastructure. It must reduce emissions while creating employment for a growing population. It must support climate adaptation while financing education, healthcare, social protection. and urban services.
In other words, Bangladesh is expected to pursue climate resilience and economic prosperity simultaneously.
The difficulty lies in the fact that the current climate finance architecture has not yet evolved to adequately support this bi-fold ambition.
Low carbon and climate-resilient development cannot be purchased simply by increasing financial commitments. It requires institutional readiness, coherent public policy, strong local governments, effective planning and budgeting systems, private sector engagement, and long-term investment strategies.
Finance remains indispensable, but finance alone cannot transform development pathways.
Developing countries cannot afford to pursue climate objectives at the expense of economic development. Nor can they postpone climate action until prosperity has been achieved. The challenge is to integrate both objectives within a balanced development strategy.
This requires moving beyond a project-based approach towards financing structural transformation.
Climate finance should strengthen national planning systems rather than creating parallel implementation structures. It should empower local governments alongside national institutions. It should mobilize private investment without undermining public accountability.
Above all, it should recognize that development and climate action are mutually reinforcing rather than competing objectives.
An equally important question deserves greater attention: What kind of financial architecture enables developing countries to simultaneously achieve prosperity, resilience, and low-carbon development?
Greater financial commitments remain essential. Vulnerable countries have repeatedly argued that existing available resources are limited compared to actual requirements. However, increasing the volume of finance alone will not resolve the underlying paradox.
The international community must also make climate finance more predictable, accessible, and aligned with national development priorities of the countries who are experiencing challenges of balancing economic prosperity and achieving climate goals.
Funding mechanisms should reduce unnecessary complexity while strengthening country ownership. Institutional readiness should be rewarded through more flexible access to finance rather than additional procedural burdens.
Most importantly, global climate finance should recognize that successful climate action in developing countries depends not only on reducing emissions but also on creating the economic opportunities that allow societies to thrive.
The climate finance paradox reminds us that expanding ambitions require equally ambitious financial and institutional reforms. Without closing the gap between expectations and implementation, developing countries will continue to face an impossible task: Delivering prosperity on a low-carbon development pathway with financial support that remains insufficient, fragmented, and difficult to access.
Bangladesh’s experience shows that the challenge is not a lack of commitment. The challenge is ensuring that the global climate finance architecture evolves as rapidly as the ambitions it now seeks to achieve.
Md Abul Basar is an anthropologist and governance expert, and serves as the team leader at a Switzerland-based international organization. He can be reached at [email protected].
