Governments find money to compensate people after catastrophes like floods. Why is financing protection before disaster strikes so much harder? And given what we know about the cost of inaction, why does the transition to low-carbon and resilient investment remain such a challenge? As financial leaders gathered in Bangkok for the 2026 World Bank–IMF Annual Meetings, the disaster-insurance payouts following Thailand’s worst floods in decades brought that question into sharp focus.
Compensation is essential, but investment in protection beforehand, such as flood defences and emissions reduction, could prevent suffering, protect livelihoods and reduce the public cost of recovery. Financial systems must recognise the value of those avoided losses.
Conspicuous by its absence
Climate was conspicuously absent as a headline theme of the World Bank’s flagship Annual Meetings agenda, which centred on jobs and private investment. This reflects a difficult political environment: the United States has pressed the Bank to refocus on poverty and growth, achieved the removal of its climate finance target and pushed for greater fossil fuel support to meet client needs.
The World Bank retained its Climate Change Action Plan while retiring its headline target. Against that backdrop, presenting renewables, grids and energy efficiency through their contribution to affordable electricity, jobs and energy security offers a politically viable route to continue climate-relevant investment. Thailand’s Low Carbon Cities project illustrates how the Bank emphasises these development benefits alongside emissions reductions. Climate has not vanished entirely from its communications: World Bank Group President Ajay Banga still reported climate finance results in his plenary speech. But its reduced prominence raises a question: can a change of language preserve and drive the improvement of quality in delivery without weakening ambition or accountability?
At the Annual Meetings, energy security, affordability and fiscal stability offered entry points into conversations that climate diplomacy alone might struggle to reach. E3G’s discussions with development banks, governments, climate funds, private banks, and civil society highlighted a common challenge: how to prevent the current energy shock from becoming a debt and development crisis, while financing the changes that would make countries less vulnerable to the next shock.
The Xingu Finance Talks, held in Bangkok in the run-up to the Annual Meetings under the UNFCCC’s Veredas Dialogue, brought the climate imperative directly into that debate. By focusing on expanding fiscal space and reducing financing costs, the talks reinforced a central message: energy security and climate resilience are fundamental to sustainable economic development.
The political task is to make that connection persuasive in a fragmented world. The financial task is to make it investable.
Financial stability starts before the shock
There were important signs of this connection being made. Discussions involving Indonesian and Thai finance ministry representatives highlighted how investments in mitigation and adaptation can support economic prosperity.
Domestic clean energy can reduce exposure to price shocks from imported fossil fuels, and resilient infrastructure can protect economic activity and public finances. These investments belong at the centre of economic policy, even if they were downplayed during the official discussions.
UK Foreign Secretary Ed Miliband offered a particularly important opening, however. In his speech at an event hosted by the Rockefeller Foundation, he laid out priorities to address debt vulnerabilities, drive private investment and shift towards preparedness and resilience, with financing arranged before crises so governments can receive rapid support when disaster strikes.
E3G’s work through this year’s T7 process provides practical proposals. The solutions paper, Enhancing insurability against natural disasters, developed by a task force co-chaired by E3G, recommends scaling pre-arranged finance, strengthening regional risk pools and embedding disaster risks in fiscal planning. It also stresses prevention and fair sharing of costs between public and private actors.
The next step is to make these approaches accessible and affordable, particularly for countries with limited fiscal space. Insurance cannot carry the whole burden of resilience.
Changing the narrative without losing the destination
Financing domestic clean power can support energy security, reduce exposure to volatile fossil fuel imports and advance climate goals.
But the overlap is not automatic. Energy security can be invoked to justify further fossil fuel dependence. Growth can come at the expense of ecosystems and vulnerable communities. Different language must therefore remain anchored in clear emissions, resilience and development outcomes.
In all this, political economy matters: understanding shareholder pressures, government priorities and institutional incentives helps identify where progress is possible. It must also help distinguish pragmatic framing from substantive retreat, so that short-term measures do not end up costing future stability and prosperity.
Systemic change: Recognise what makes an economy resilient
Emergency budget support may be essential, yet stabilising a country today without reducing its exposure to future energy and climate shocks leaves the underlying vulnerability intact.
E3G’s work on debt and resilience identifies this reinforcing cycle whereby climate damage weakens economies, while debt burdens restrict their ability to invest in protection and recovery. Debt sustainability analysis, credit assessments and financing decisions should better recognise both climate risks and credible investments that reduce them. The newly reviewed debt sustainability framework for low income countries marks a welcome step in that direction.
Nature belongs in this calculation, too. Zambia’s work on natural capital accounting illustrates how forests, water and land can inform economic planning. The next challenge is translating that knowledge into budget and investment decisions.
Institutional change: Make risk-sharing work across the system
Guarantees are useful, yet their availability alone does not ensure deployment.
Multilateral development bank (MDB) mandates, staff incentives, legal frameworks and domestic institutional capacity all affect whether risk-sharing reaches viable investments. E3G and IDFC’s research also shows why credit rating methodologies and prudential treatment need to recognise the risk-reducing role of public development banks more accurately.
The Private Infrastructure Development Group’s guarantee work and the IDFC Public Development Bank Guarantee Hub offer practical foundations. The Hub should help national institutions access expertise and appropriate instruments, including for subnational investment, while connecting guarantees to project preparation and country priorities.
Success should mean more affordable finance and better development outcomes, not simply larger mobilisation announcements.
Delivery: Organise around regional and country priorities
Regional and country-led approaches require sustained institutional capability. Finance ministries need sector ministries, national development banks, local authorities, domestic financiers and communities working together.
Bilateral partnerships can contribute, too. But disconnected investments impose coordination costs and risk fragmenting national investment plans. Partners should align behind a coherent programme, matching grants, concessional lending, policy support and guarantees to different needs.
Academics, practitioners and financiers should work alongside domestic institutions to resolve actual bottlenecks: weak project preparation, currency exposure, utility payment risks and limited access to suitable finance.
The political test moves to delivery
Ed Miliband’s Bangkok speech placed debt, investment and resilience on the agenda for the UK’s forthcoming G20 presidency. That creates an opening to work with climate-vulnerable country leaders and connect debt diplomacy with climate diplomacy.
The credibility test is whether reform expands countries’ capacity to invest. Debt initiatives and private capital mobilisation must accompany reliable support for the World Bank’s International Development Assistance (IDA) and other concessional finance. Otherwise, vulnerable countries could face another reform agenda without the resources to benefit from it.
The challenge now is to turn a changing narrative into a changing financial system. The words should open political doors. The momentum needs to be kept up to COP31 and to Finance in Common in 2027 and beyond. The financing must deliver a safe climate for all.
