COP29 is an opportunity to close the adaptation finance gap
Climate Champions' Youth Fellow, Amal Ridene sheds light on scaling adaptation finance at COP29, where adaptation funding and private sector engagement are central to closing the climate resilience gap. As finance remains underfunded, COP29 offers new opportunities for impactful investment in adaptation.
By Climate Champions Youth Fellow, Amal Ridene | November 12, 2024
COP29 is set to be the “Finance COP,” with a critical focus on climate finance. Central to this agenda is the New Collective Quantified Goal (NCQG) on climate finance, following the $100 billion target in 2025. Building on a series of Technical Expert Dialogues, high-level ministerial dialogues, and informal consultations, COP29 seeks to shape this new financial goal to address the urgent needs of developing economies.
Beyond the NCQG, finance remains a key topic of focus for COP29, notably when it comes to financing climate adaptation, which continues to be underfunded. Adaptation funding remains significantly below the needed levels. The 2024 UNEP Adaptation Gap Report (AGR) shows adaptation finance flows to developing countries increased from $22 billion in 2021 to $27.5 billion in 2022, far short of the $387 billion required annually until 2030. The AGR notes that private sector investment currently meets only a third of adaptation needs—an untapped opportunity that could significantly close this financing gap.
Engaging the private sector in adaptation finance requires reducing investment risks. Blended finance, which strategically combines public, philanthropic, and private funds, has proven effective in the renewable energy sector and holds similar promise for adaptation. Risk-sharing structures and guarantees can make adaptation projects, such as resilient infrastructure and climate-smart agriculture, more attractive to investors.
One example is Gawa Capital, a pioneering impact investment firm that mobilizes private capital for sustainable development projects, especially in underserved areas. Gawa Capital’s model—combining public and philanthropic funding with private capital—demonstrates how blended finance can drive adaptation projects with both financial returns and social impact. Expanding such models could transform adaptation financing, fostering a supportive environment for private sector engagement at COP29 and beyond.
The Sharm Sheikh Adaptation Agenda (SSA) emphasizes the importance of such a collaboration in tackling the adaptation finance gap. By providing clear and tangible near-term solutions, it enables adaptation and resilience transformations across all systems to make 4 billion vulnerable people resilient by 2030.
The Business, Investment, and Philanthropy Climate Platform (BIPCP) is another opportunity for business, finance, and philanthropic communities to drive joint action toward achieving the goals of the Paris Agreement, with a focus on key finance collaboration topics including public-private finance collaboration, and adaptation and nature.
COP29 Presidency is also convening a High-Level Ministerial Dialogue on the urgent need to scale up adaptation finance. The dialogue focuses on concrete actions needed to scale adaptation finance and to make National Adaptation Plans (NAPs) investable. It comes as a continuation of the “Doubling adaptation finance” efforts in response to the Glasgow Climate Pact.
With a COP that is putting an emphasis on both state and non-state actors’ role on driving adaptation finance, it is important that the private sector, notably financial institutions, speed up the climate capital towards adaptation. With a cost of inaction that outweighs the cost of action, these interventions need to be done in a timely, accessible, and ambitious manner.
