Toward accelerating climate finance: forging a new partnership between the Global South and the Global North

Economywide decarbonization is essential for achieving the climate goals set in the Paris Agreement. This will require deploying and scaling up green infrastructure and technologies. While finance flows toward climate action—both mitigation and adaptation—have been increasing, the rate of increase has been much slower compared to the rate of growth of required investment, leading to a growing climate finance gap. Emerging market and developing economies (EMDEs) and least developed countries (LDCs), in particular, have seen significant gaps in both mitigation and adaptation. Further, in a majority of developing countries, public finances are strained, inflation is high, and debt is mounting due to the pandemic and volatile geopolitical conditions. This compounds the problem, especially in light of the fact that EMDEs and LDCs will witness rapid growth and need increased investments. The policy brief looks at ways to address this gap and the role of Group of Seven countries in supporting this journey.