Climate Finances – A brief overview

In order to meet the global targets of climate change and the United Nations Sustainable Development Goals, every member nation requires funds in order to meet the objectives. These funds allocated towards climate change mitigation are called climate finances.

The United Nations Framework Convention on Climate Change (UNFCCC) defined climate finances as those “local, national or transnational financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change.” (Introduction to Climate Finance, n.d.)

The rationale for climate financing

The primary raison d’etre for climate change financing is that large investments are required in order to reduce global carbon emissions. There are some countries that are economically sound while others that are not so financially sound. However, regardless of financial stability, every country is required to meet the global climate targets of the Kyoto Protocol and Paris Agreement. This makes it necessary even for the poor countries to make efforts toward climate change mitigation. In order to bridge the economic inequalities between countries, the developed and developing world come together towards equitable reallocation of funds to make investments for climate change mitigation. These funds can be towards developing environmentally sound technologies, initiating policies in countries that address climate change, or even building resilience against climate change.

Green Climate Fund

In order to engage in climate financing at the global level, Green Climate Fund was founded under the aegis of the UNFCCC in 2010. It is a platform established by 194 governments that aim to respond to climate change by investing in low-emission and climate-resilient development. The funds raised by the GCF target to reduce greenhouse gas emissions in developing countries by seeking economic aid from developing countries. These funds would not only address the larger goal of climate change but also help in supporting vulnerable and marginalized communities from the impact of climate change.

Commitments made by the developed countries

The industrialized parts of the world have made several commitments toward climate finances. At the Copenhagen Climate Change Conference of 2009, the industrialized countries had committed to mobilizing as of 2020 an additional annual 100 billion US dollars from public and private sources for climate change mitigation and adaptation in developing countries. Similarly at the Paris Conference which led to the Paris Agreement of 2015, developed countries promised to continue to provide 100 billion US dollars per annum until 2025 which has increased further in the recent past owing to the urgency of the climate crisis.


(n.d.). Green Climate Fund (GCF). Retrieved May 30, 2022, from

Climate finance: Germany remains a reliable partner. (n.d.). Climate finance | BMZ. Retrieved May 30, 2022, from Introduction to Climate Finance. (n.d.). UNFCCC. Retrieved May 30, 2022, from

Published by LakesOfIndia

Lakes of India is an E.F.I initiative aimed at sensitizing the larger public on freshwater habitats across the country. A blog platform where one can read about lakes across India. You can become a guest blogger to write about a lake in your hometown and initiate an action to protect that lake.

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