All Roads Lead to Reform: a Financial System Fit to Mobilize $1.3 Trillion for Climate Finance

At COP29 in Baku, Parties to the Paris Agreement adopted a New Collective Quantified Goal (NCQG) on climate finance for developing countries, setting a minimum floor of $300 billion per year by 2035 with developed countries taking the lead, and an aspirational goal of $1.3 trillion annually from all sources. The decision text dedicated a paragraph to the importance of reforming the multilateral financial architecture and removing the structural barriers and "disenablers" facing developing countries in financing climate action, "including high costs of capital, limited fiscal space, unsustainable debt levels, high transaction costs and conditionalities for accessing climate finance." In light of the underwhelming provision and mobilization of climate finance for developing countries, this report identifies several priorities for systemic reform that can help scale climate finance flows and create a more enabling international financial architecture (IFA) for climate-resilient development. It responds to Decision 1/CMA.6 for a NCQG adopted at the 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) in Baku, Azerbaijan, in November 2024, which calls on "all actors to work together to enable the scaling up of financing to developing country Parties for climate action from all public and private sources to at least $1.3 trillion per year by 2035."