A coalition of leading multilateral development banks (MDBs) announced an estimated annual climate financing target of $120 billion for low- and middle-income countries, shared on the opening day of the World Leaders Climate Action Summit at COP29 in Baku, Azerbaijan. Of this total, $42 billion will be dedicated to climate adaptation. The MDBs also plan to mobilise $65 billion each year from the private sector. For high-income countries, MDBs project an annual climate financing goal of $50 billion, including $7 billion for adaptation, with the same $65 billion target from private sector mobilisation.
The MDBs involved include the Asian Development Bank (ADB), World Bank Group, African Development Bank (AfDB), Asian Infrastructure Investment Bank (AIIB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank Group (IDB), Islamic Development Bank (IsDB), New Development Bank, and the Council of Europe Development Bank (CEB). The banks have collectively surpassed their 2025 climate finance targets, recording a 25% increase in direct climate finance and a doubling in climate mobilisation over the past year.
During a high-level session in Baku, COP29 President Mukhtar Babayev emphasised the need for expanded financing, saying, “Every contribution is welcome, but there is still a clear gap between where we are and where we need to be. We are working closely with the shareholders of international financial institutions at COP29 as we seek to build the foundations of a fair and ambitious new climate finance goal.” He added, “We must deliver what the world expects, including climate financing that is several multiples beyond existing arrangements, adequate to the scale and urgency of the problem.”
Operationalising the loss and damage fund
The COP29 Presidency announced the operational readiness of the Fund for responding to Loss and Damage, set to begin project financing by 2025. Key agreements were signed on the second day of COP29, including the Trustee Agreement and Secretariat Hosting Agreement between the Fund’s Board and the World Bank, and the Host Country Agreement with the Republic of the Philippines.
Sweden pledged approximately $19 million to the Fund, subject to government approval, bringing the total pledged to over $720 million. The COP29 Presidency expressed appreciation for Sweden’s support and called for additional contributions to meet the urgent needs of communities facing climate impacts.
The COP29 Presidency also introduced a high-level annual dialogue on funding coordination for loss and damage, bringing together stakeholders from across and beyond the UNFCCC process.