2025 policy bulletin: climate finance for development
2025: A Pivotal Year for Climate and Development
The year 2025 marks a crucial period for global climate and sustainable development efforts, with major events such as the Finance in Common Summit (FiCS), the International Conference on Financing for Development (FfD4), the G20 Summit, and the UNFCCC COP30. Public Development Banks (PDBs) are set to play a significant role in these discussions due to their crucial part in implementing these agendas through financial support and stakeholder engagement.
Accelerating Climate and Sustainable Development through Public Development Banks
A recent policy bulletin highlights key strategies to accelerate and scale up the contribution of PDBs to low-emissions and climate-resilient development. The central idea is to adopt a “bottom-up” approach, empowering countries and their domestic institutions from the very beginning of reforms. This ensures a sense of ownership and better alignment with local needs, ultimately leading to more effective and accelerated change.
A key focus is on strengthening domestic markets and sourcing local finance. This is seen as essential for two reasons:
- It addresses the availability and cost of capital.
- It helps in achieving ambitious decarbonization, adaptation, and sustainability goals.
Key Recommendations for PDBs
This bulletin synthesizes research from various organizations to offer actionable recommendations for PDBs, shareholder governments, and other stakeholders across several key areas:
- Operationalizing Paris Alignment and Impact Measurement: Aligning financial flows with the goals of the Paris Agreement and effectively measuring the impact of these investments.
- “Public-Public” Collaborations for Climate Finance: Fostering cooperation among public institutions to boost climate finance.
- Mobilizing Private Finance to Meet Climate Investment Gaps: Creating mechanisms to attract private capital to fill the significant funding gaps in climate projects.
- Building Platforms for Just Transition and Sustainable Development: Establishing frameworks and platforms that support a fair and equitable transition to a sustainable economy.
- Financing the Energy Transition: Providing financial support for the shift from fossil fuels to renewable energy sources.
- Other Emerging Themes: Exploring new and critical areas like nature finance (investing in nature-based solutions), carbon markets, and leveraging digital technology to enhance climate action.
This document will be regularly updated to serve as a resource for evidence-based discussions, helping practitioners, policymakers, investors, and researchers coordinate their efforts and work towards common goals.
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