Global leaders gathered in Italy this week for the G7 Summit one month after the OECD announced that rich countries had finally met the goal of mobilizing $100 billion annually in climate finance for developing countries. Despite this milestone, the impacts of climate change on developing countries are becoming increasingly severe. Devastating flooding displaced nearly 600,000 people in Brazil’s Rio Grande do Sul in April and May and an ongoing heatwave killed over 100 people over just 72 hours, including election officials, in India. Leaders from both countries are expected to attend the G7 Summit along with several other leaders from the Global South, and, together, they will undoubtedly push for a new, more ambitious goal for climate finance. Beyond increasing the amount of finance that developed countries provide, a new climate finance goal should ensure that the finance offered is affordable, accessible, and transparent.

Affordable. Many of the most climate-vulnerable countries are in a debt crisis. Investment in emerging markets barely covers the depreciation of existing assets. Net financial flows from international financial institutions like the World Bank and International Monetary Fund to developing countries fell by nearly $40 billion between 2022 and 2023. Private financial flows fell by nearly $70 billion over the same time period. Lending under China’s Belt and Road Initiative has also fallen steeply in recent years, shrinking by nearly 50% between 2016 and 2021. This decline in funds has made it increasingly burdensome for governments in developing countries to pay back existing debts, much of which was borrowed to build the infrastructure needed to lift millions out of poverty. Countries across the Global South have been forced to slash health and education spending and the United Nations has warned of a “lost decade for developing countries.” To ensure their life and safety, these countries also need to build their climate resilience; to protect themselves from the flooding, heatwaves, sea level rise, and other hazards climate change is already bringing. Yet, asking these countries to take on more debt will pose an impossible choice. Only 45 percent of the climate finance provided to Least Developed Countries and Small Island Developing States in 2022 took the form of grants, which do not add to debt levels, with the remainder coming from a mix of market-rate and concessional loans.

Accessible. The institutions who provide climate finance too often require countries to complete lengthy, time-consuming, complicated applications. It is understandable that funding institutions want to ensure their funds go to their intended purposes and are directed to the most urgent needs. But, in practice, complex application requirements may too often undermine these goals. The resources that must be spent to prepare applications – whether the time of overstretched technical staff or the payments to consultants – are resources not being spent to build climate adaptation directly. This cost is especially painful for countries whose applications are unsuccessful and who get no return for the time and money invested. Furthermore, it is precisely those frontline countries who have the fewest available resources and the least capacity. They are the most in need of support, and consequently the least able to compete for and access international climate finance. Lending institutions must simplify their application procedures. Efforts like the Efficient Green Climate Fund are a good example of how to streamline these application processes.

Transparent. The flows of climate finance from rich countries to the Global South are hard to track. Reuters investigations in 2023 and 2024 have begun to shine a light, and their findings are neither pretty nor encouraging. There are cases where billions of dollars secured in bilateral agreements have been channeled back to the donor countries and investments labeled as climate finance are being spent on coal plants and chocolatiers. Further, these donor countries reported to the UN that these loans are helping to meet their climate goals.  Such hidden – and highly questionable –spending not only erodes trust between rich countries and the Global South, but it also reduces the funding available for projects needed to build climate adaptation on the ground, such as mangrove restoration and climate resilient agriculture. It also harms the effectiveness of future spending by inhibiting learning from the successes and shortcomings of previous projects. This type of iterative learning was critical to the success of the Montreal Protocol’s reduction of ozone-depleting substances. But an equivalent process cannot happen without easily available information on the lessons learned from on-the-ground projects. To overcome these shortcomings, going forward, climate finance commitments should leverage and expand the application of tools like the Enhanced Transparency Framework and the Global Climate Action Portal to build trust and knowledge while also building climate resilience.

COP29 is only five months away. There, global leaders will adopt a new collective quantified goal to replace the $100 billion per year commitment. The Independent High-Level Expert Group on Climate Finance projects that developing countries will need $1 trillion per year in international climate finance. Other estimates put the figure even higher. Such goals are unlikely to be adopted by European and American leaders facing serious economic challenges, and financial commitments related to the wars in Ukraine and Palestine to and global inflation. Therefore, every dollar that is available will need to be used effectively. Climate finance affordability, accessibility, and transparency may seem like dry, technical issues. But they will have real consequences in the lives and livelihoods facing destruction in the frontline countries that have often done little to contribute to the climate crisis. The G7 Summit is an opportunity to advance these urgent goals. Seize it.