Climate Finance from Multilateral Banks Reaches Up to $125 Billion in 2023, According to Reuters

By Marcela Ayres

BRASILIA – Global climate finance from multilateral development banks saw a remarkable 25% increase in 2023, reaching an unprecedented total of $125 billion, as reported on Friday. The most rapid growth was observed in wealthier nations.

The report highlights that climate finance directed towards high-income economies surged by 30%, totaling $50.3 billion. Climate finance encompasses funding for initiatives aimed at addressing climate change, which can include grants, loans, and proceeds from bonds.

In contrast, the growth in climate finance for low- and middle-income nations was more modest, increasing by 23% to $74.7 billion.

The data in the report was compiled from ten institutions, including the World Bank Group and development banks serving regions such as Asia, Europe, Africa, Latin America, the Caribbean, and the BRIC countries.

Ilan Goldfajn, President of the Inter-American Development Bank, acknowledged the notable increase in climate finance but emphasized the necessity for more ambitious actions to tackle the escalating frequency of climate-related disasters, including heatwaves and floods.

"This challenge transcends political differences, national borders, geography, and income levels. It is a global issue that requires collective action," he stated, hinting at a message he plans to deliver at the upcoming United Nations General Assembly and Climate Week in New York.

France, Spain, and Italy were the top recipients of climate finance from these institutions last year, receiving $7.4 billion, $7 billion, and $6.7 billion, respectively.

Many emerging economies, which often grapple with limited financial resources and heightened vulnerability to extreme weather events, have called for increased financial support to combat the climate crisis, especially as the costs of debt financing continue to rise.

Despite the growth in climate-oriented investments, much of the funding has been directed towards renewable energy and emission reduction efforts, rather than adaptation strategies to manage the impacts of climate change, such as rising sea levels and intensified droughts, wildfires, and storms.

Out of the $125 billion allocated to climate finance last year, $27.7 billion—approximately 22% of the total—was earmarked for climate adaptation, a decrease from 25% in 2022.