Bridging the climate finance gap: Why global leaders must rethink priorities

Introduction

As the global community barrels toward the 2030 deadline for the UN SDGs, ambitions are outpacing financing. ODA, a cornerstone of concessional funding for development and climate action, is falling right as action is most needed.

In May 2025, SEEK Development participated in the Global Solutions Summit in Berlin, where we joined leaders from government, civil society, academia, and the private sector to help launch an initiative on climate finance and the SDGs. The project, led by the Global Solutions Initiative, is designed to inform the upcoming South African G20 presidency at a moment of unprecedented urgency. At the heart of the initiative is a critical question: How do we identify and overcome the financing gaps holding back climate action and sustainable development, particularly in regions with the greatest need?

ODA trends

Global ODA flows from the world’s largest sovereign donors are projected to decline from US$210 billion in 2023 to US$173 billion in 2025, a drop of more than a third. In Germany, for example, ODA is estimated to decrease from US$38 billion in 2023 to US$28 billion in 2026. In the UK, ODA is likely to fall below US$14 billion by 2026, down from US$19 billion in 2023.

While climate finance is not limited to ODA, the link between the two is critical, especially when it comes to adaptation. Climate adaptation efforts seek to address the current and projected impacts of climate change, including resilience strategies to prepare for extreme weather events and rising sea levels, as well as protecting biodiversity and food and water security. In 2022, global adaptation financing reached an estimated US$76 billion, and nearly half of that came from ODA. Yet this is only a fraction of what is needed. The estimated annual adaptation financing requirement for emerging markets and developing economies by 2030 is US$212 billion. These looming ODA cuts therefore represent a crushing blow to global adaptation efforts, particularly in the countries most vulnerable to climate shocks.

Meanwhile, climate finance commitments made by high-income countries remain unmet. Under the NCQG agreed to at COP29, developed countries are expected to mobilize US$300 billion per year by 2035 for climate action in low- and middle-income countries. The reality is far from that goal. In 2022, only US$116 billion in climate finance was actually delivered to developing countries. If current growth rates continue at their most conservative pace—as observed between 2018 and 2021—the US$300 billion commitment won’t be reached until 2047. And even this commitment through the NCQG is far short of the US$1.3 trillion asked for by low-income countries at COP29, based on needs assessments.

The future of ICF

It is clear that the status quo of finance must change to effectively address the issue of climate change.

First, advocates must ensure that the limited pool of concessional finance that does exist, particularly ODA, is prioritized for adaptation efforts in the most vulnerable countries. These countries, which contribute just 2% of global greenhouse gas emissions but are home to 40% of the global poor, are bearing the brunt of climate impacts. Redirecting resources toward adaptation in these contexts is not only a matter of justice, it is essential to preserve development gains and building long-term resilience.

Second, the global financing community should elevate investments that deliver both mitigation and adaptation co-benefits. When wisely designed, climate investments can reduce emissions while also shielding communities from risk. Resilient infrastructure, nature-based solutions, and integrated urban planning are just a few examples of interventions that offer these “co-benefits”—and they should be at the center of financing strategies going forward.

Finally, advocates must move beyond ODA alone and build a more diversified, durable financing ecosystem. This includes scaling up blended finance models that can crowd in private capital, engaging non-traditional donors and regional financial institutions, and using global platforms like the G20 to unlock new mechanisms for south-to-south and public-private collaboration. The private sector also has a role to play, but it requires clear signals, fair incentives, and an enabling policy environment to act at scale.

Bridging the climate finance gap isn’t just a technical challenge—it’s a moral imperative to build a climate finance architecture that reflects today’s needs and tomorrow’s risks. But doing so will require not just new money, but new thinking. It will require courage to reprioritize, creativity to restructure how capital flows, and collaboration across sectors and borders.