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Children in Bangladesh riding a boat through a flooded river to attend school. Bangladesh is one of the most climate-sensitive regions in the world. Credit: UNICEF/Suman Paul Himu
– In recent years, international climate financing has declined sharply, leaving billions of people in developing nations increasingly vulnerable to natural disasters and unable to adapt effectively. With major cuts in foreign aid, these communities are expected to face the brunt of the climate crisis, while wealthier nations continue to reap economic benefits.
A new report from Oxfam and CARE Climate Justice Center, Climate Finance Shadow Report 2025: Analyzing Progress on Climate Finance Under the Paris Agreement, showcases the significant gaps in climate financing for developing countries in the Global South, and the far-reaching implications for climate resilience and global preparedness.
This comes ahead of the 30th United Nations (UN) Climate Change Conference (COP30), in which world leaders, diplomats, and civil society groups will converge in Belém, Brazil, from November 10–21, to discuss strategies to strengthen global cooperation, advance inclusive and sustainable development, and accelerate efforts to address the climate crisis. The United Nations Environment Programme (UNEP) states that there will be a major focus on allocating public funds for mitigation and adaptation efforts in developing countries, aiming to mobilize at least USD 300 billion annually by 2035 for developing countries and a yearly USD 1.3 trillion over the same period.
In the report, CARE and Oxfam found that developing countries are paying disproportionately high disbursements to wealthy nations in exchange for comparatively modest climate finance loans—spending about seven dollars for every five dollars they receive in return. This, compounded with “the most vicious foreign aid cuts since the 1960s”, shows a nearly 9 percent drop in climate funding in 2024, which is projected to drop by a further 9-17 percent in 2025.
“Rich countries are failing on climate finance and they have nothing like a plan to live up to their commitments to increase support. In fact, many wealthy countries are gutting aid, leaving the poorest to pay the price, sometimes with their lives” said John Norbo, Senior Climate Advisor at CARE Denmark. “COP30 must deliver justice, not another round of empty promises.”
As of 2022, developed nations reported pledging approximately USD 116 billion in climate funding for developing countries. However, the actual amount delivered is less than one-third of the pledged total — estimated at only USD 28–35 billion. Nearly 70 percent of this funding came in the form of loans, often issued at standard rates of interest without concessions. As a result, wealthy nations are driving developing countries deeper into debt, despite these nations contributing the least to the climate crisis and lacking the resources to manage its impacts.
It is estimated that developing countries are indebted by approximately USD 3.3 trillion. In 2022, developing countries received roughly USD 62 billion in climate loans, which is projected to produce over USD 88 billion for wealthy countries, yielding a 42 percent profit for creditors. The countries issuing the highest concessional loans in climate financing were France, Japan, Italy, Spain, and Germany.
“Rich countries are treating the climate crisis as a business opportunity, not a moral obligation,” said Oxfam’s Climate Policy Lead, Nafkote Dabi. “They are lending money to the very people they have historically harmed, trapping vulnerable nations in a cycle of debt. This is a form of crisis profiteering.”
Despite wealthy nations issuing high loans to developing countries, Least Developed Countries (LDCs) received only 19.5 percent of the total public climate funding over 2021-2022, while Small Island Developing States (SIDs) received roughly 2.9 percent. Only 33 percent of this funding went toward climate adaptation, a “critically underfunded” measure according to Oxfam, as the majority of creditors favor investing in mitigation efforts that deliver faster financial returns. Additionally, only 3 percent of this funding went to gender equality efforts, despite women and girls being disproportionately impacted by the climate crisis.
The report also underscores the dire impacts of the misallocation of climate financing and funding cuts, as vulnerable communities in particularly climate-sensitive environments find themselves with far fewer resources to adapt to natural disasters.
In 2024, communities in the Horn of Africa were ravaged by brutal cycles of droughts and flooding, which displaced millions of civilians and pushed tens of millions into food insecurity. In Rio Grande do Sul, Brazil, massive floods caused over 180 civilian deaths, displaced 600,000 people, and the resulting damage led to billions of dollars in losses. According to figures from UNICEF, around 35 million children in Bangladesh experienced school disruptions in 2024 due to heatwaves, cyclones, and floods, posing serious risks to their long-term development. The United Nations Environment Programme (UNEP) warns that global temperatures are on course to rise to a “catastrophic” 3°C by the end of the century, with extreme weather events expected to intensify further.
Ahead of the COP30 conference, Oxfam has urged wealthy nations to honor their climate finance commitments, including the delivery of the full USD 600 billion pledged for the 2020–2025 period, aligning with the UN’s target of mobilizing USD 300 billion annually. The organization also called for a substantial increase in global funding for climate adaptation and loss management, alongside the implementation of higher taxes on the wealthiest individuals and fossil fuel companies—which could generate an estimated USD 400 billion per year. Additionally, Oxfam emphasized the need for developed countries to stop deepening the debt of climate-vulnerable nations by expanding the share of grants and highly concessional financing instead of standard loans.
IPS UN Bureau Report
