Money for people and planet: mobilizing climate finance for climate action

Meeting Paris Agreement climate objectives will require massive investment in developing nations and emerging markets. Excluding China, these countries will need approximately $1 trillion annually by 2030 for critical climate initiatives including renewable energy infrastructure, sustainable transportation systems, and climate-resilient agriculture. These investments are particularly crucial as developing nations often face higher climate vulnerability and resource constraints in adapting to climate challenges.

Yet recent international climate commitments from developed nations and multilateral institutions at COP29 amount to just $300 billion annually by 2035 — representing about one-sixth of the estimated need.

“This is discouraging. We will move faster towards climate action with global consensus on the scale of the needed solutions,” noted Matt Tilleard, Managing Partner at CrossBoundary Group.

Notably, the COP29 outcomes reveal that governments recognize that public funding alone is insufficient to bridge the funding gap. The new collective quantified goal (NCQG) text includes funding from “a wide variety of sources, public and private, bilateral and multilateral, including alternative sources.”

The private sector shows readiness to take on the challenge. At events organized by Bloomberg, Semafor, the New York Times, McKinsey, BCG, and others at COP29, investors weren’t just talking about climate finance as a moral imperative. “I interacted with a huge variety of private investors who now see the potential for profit as well as purpose in funding climate mitigation and adaptation,” Tilleard continued. “Standard Bank’s recent $140 million commercial debt commitment to CrossBoundary Energy is evidence that the private sector is stepping up to plug the gap.”

Bridging the gap: local solutions in action

While the global funding gap is daunting, localized approaches are already showing how to bridge it effectively. These targeted solutions recognize that climate change affects different regions in vastly different ways, requiring customized financial approaches.

Take Laos, for instance. CrossBoundary Advisory works closely with investors to unlock climate finance that supports the government’s Nationally Determined Contributions (NDCs), developing financing mechanisms like green bonds and blended finance to attract diverse forms of capital.

“Many regions in Laos are highly vulnerable to environmental changes, with significant economic sectors such as agriculture and energy being at risk. Mobilizing climate finance ensures the country can pursue sustainable development,” said Nandini Chaudhury, Head of Asia-Pacific Advisory at CrossBoundary Advisory.

Similarly in Malawi, CrossBoundary’s cross-cutting Climate team (comprised of our Power and Infrastructure and Natural Capital advisory practices) is supporting USAID to mobilize private sector climate finance through new partnerships and innovative funding models.

“Malawi’s rich natural resource base and strengthening policy environment make it an ideal testing ground for innovative climate finance mechanisms,” said Christine Livet, Associate Principal on the Natural Capital team. “We’re seeing exciting opportunities in food security, renewable energy adoption, and ecosystem protection that demonstrate how targeted solutions can attract private capital while delivering multiple benefits.”

In Latin America, our Natural Capital team also worked alongside the USAID Climate Finance for Development Accelerator (USAID CFDA), examining the current investment landscape in the Brazilian Amazon’s bioeconomy. The study reveals key investment gaps for nature-based businesses and how strategic investment can drive both returns and regeneration. Insights like these are critical in bridging information gaps for investors to unlock private investment.

In the Caribbean, we are helping mobilize investment in the region’s blue economy and climate resilience. Through USAID’s Caribbean Sustainable Ecosystems Activity (CSEA), our regional team in the Caribbean is working alongside the Pan American Development Foundation to advance three key areas with clear investment potential: marine protected areas, solid waste management, and sustainable fisheries. These initiatives aim to support both local livelihoods and regional economic development.

In Madagascar, our work in the commercial and industrial (C&I) energy space demonstrates how private-sector solutions can drive both industrial development and climate action. CrossBoundary Energy joined the Malagasy delegation at COP29 to showcase a pioneering hybrid solar and wind project powering the QMM mine in Southern Madagascar.

“Through our engagement with government delegations and stakeholders at COP, it became clear that distributed energy resources can be a powerful tool for developing countries,” noted Henry Carr, Energy Policy Director at CrossBoundary Energy.

“With the right policy framework in place, these projects can attract investment that helps countries meet their decarbonization objectives while supporting industrial growth,” he said.

CBE Energy Policy Director, Henry Carr at COP29 speaking on a panel at the Malagasy Pavilion with Madagascar’s Director of Hydrocarbons, Razafimamonjy Jinot, to showcase our renewable energy partnership with Rio Tinto in Fort Dauphin.

The path forward: catalyzing climate action

The challenge to achieving the Paris Agreement goals remains enormous. The $0.9-1.1 trillion annual funding need in developing countries represents urgent imperatives: protecting communities from rising seas, equipping farmers with drought-resistant crops, and building resilient urban infrastructure.

Moving forward requires a three-pronged approach: creating more bankable projects, developing innovative financing mechanisms, and demonstrating that climate investments can deliver returns. While governments may have set modest targets in Baku, the private sector is demonstrating far greater ambition. CrossBoundary will continue collaborating across our investment platforms to mobilize the capital needed for a sustainable, climate-resilient future.