The IMF-World Bank Annual Meetings in Bangkok exposed a disconnect – climate received limited attention on the main stages, while countries confronted the fundamentally linked issues of energy insecurity, extreme weather and constrained public finances.
Governments need affordable finance to reduce vulnerability before shocks hit, and rapid support when losses occur. This means investing in clean energy, adaptation and resilience including pre-arranged disaster finance. Progress on how the financial system accounts for avoided losses will be key to turning rhetoric into action.
Ambition must be judged by outcomes
Climate action and the green transition are central to creating jobs, delivering affordable electricity and strengthening energy security. Investment in renewables, grids and energy efficiency creates jobs, expands access and strengthens energy sovereignty, while investment in resilience protects infrastructure, livelihoods and public finances. Development banks should pursue these goals together. But this pragmatism must retain clear emissions and resilience objectives, transparent reporting and accountability.
Shareholder pressures and institutional incentives shape development banks’ choices. Understanding those constraints helps identify opportunities to strengthen climate ambition and delivery – and hold institutions accountable where their decisions undermine long-term development and resilience. It should also expose where pragmatic framing becomes substantive retreat. Energy security must not become a justification for locking countries into further fossil fuel dependence.
Finance resilience before the shock
Climate damage and debt reinforce each other: disasters weaken economies and public finances, while debt servicing limits investment in protection and recovery. Debt sustainability analysis, credit assessments and financing decisions should recognise climate risks and credible investments that reduce them. Countries need debt solutions that create room to invest.
The newly reviewed debt sustainability framework for low-income countries highlights the importance of recognising adaptation and marks a welcome step.
Pre-arranged disaster finance can provide rapid liquidity, but it must be affordable and sit alongside prevention, adaptation and social protection. The T7 solutions paper, Enhancing insurability against natural disasters, developed by a taskforce co-chaired by E3G, sets out practical priorities: stronger regional risk pools, better data, disaster risks embedded in fiscal planning and fair sharing of costs between public and private actors.
Nature belongs in this calculation. Forests, wetlands and water systems protect livelihoods and infrastructure. Country-led approaches to natural capital accounting, including Zambia’s work, offer ways to bring that value into economic planning. Recognising it must translate into investment.
Make finance work for country priorities
Private capital mobilisation should be judged by whether it helps countries build resilient economies, functioning markets and stronger public institutions. Mobilisation totals alone cannot show whether finance reaches underserved countries or improves people’s lives. Reliable funding for IDA and other concessional sources remains essential, especially where private investment cannot meet public needs.
Guarantees can help reduce financing barriers and the IDFC PDB Guarantee Hub aims to tackle some of these challenges, going beyond just announcing instruments. Development banks and their shareholders need to address mandates, staff incentives and legal constraints that impede deployment. Credit rating methodologies and prudential frameworks should accurately recognise risk mitigation. At a country level, project preparation, currency exposure and utility payment risks require practical solutions.
Developing countries are organising to influence these terms. The Borrowers’ Platform, Accra Reset and Africa Credit Rating Agency pursue different objectives but share a demand for greater agency over development finance. Their test will be whether institutional progress produces better financing terms and development outcomes.
Country platforms can connect national priorities to investment, provided governments retain decision-making authority. Finance ministries should bring together sector ministries, national development banks, domestic financiers, local authorities and communities around coherent programmes. International partners should strengthen these institutions and domestic markets. Universities and local research institutions can support modelling, assess distributional impacts and track delivery.
The COP31 Presidency’s BRIDGE initiative, supported by UNDP, has named pilot countries and aims to turn country priorities into finance-ready portfolios. This is a concrete preparatory step and needs to be driven towards action so that investment reaches communities. Progress should be judged by national decision-making authority, projects financed and benefits delivered.
Turn political milestones into financing decisions
The UK Foreign Secretary Ed Miliband gave an important and clear signal on where the UK stands ahead of its G20 Presidency next year. In his speech at an event hosted by the Rockefeller Foundation, harking back to the legacy of the UK’s last G20 Presidency, he emphasised the importance of a global financial system that reflects its future and not its past. COP31 and the UK’s G20 presidency offer opportunities to connect debt, investment and resilience in a shared delivery agenda with climate-vulnerable countries. Priorities should include predictable public and concessional finance, simpler access, effective risk-sharing and affordable disaster protection, alongside investment in clean energy and adaptation.
Energy security, affordability and fiscal stability offered entry points into conversations that climate diplomacy alone might struggle to reach. These conversations highlighted a common challenge: how to prevent the current energy shock combined with accelerating extreme weather shocks from becoming a debt and development crisis. The Xingu Finance Talks, held in the run-up to the Annuals, addressed this directly and the annual report under the Veredas Dialogue will be an important milestone.
The second Global Stocktake should draw on country evidence to examine whether finance enables implementation, and where debt, financing costs and access barriers obstruct it. Presidency initiatives and country platforms should support delivery while preserving accountability for international finance commitments.
Leaders should agree concrete decisions, named responsibilities and implementation timetables. Progress means countries can invest before the next shock, protect vulnerable households and access rapid support afterwards without deepening debt distress. Climate may recede from the vocabulary. Its consequences remain on the balance sheet.
