The war against climate change not just requires intent but also needs resources. Climate finance is the finance allocated to activities dedicated to fighting climate change. 

According to the United Nations Framework Convention on Climate Change, “Climate finance refers to local, national or transnational financing-drawn from the public, private and alternative sources of financing-that seeks to support mitigation and adaptation actions that will address climate change.”

In this article, read more about climate finance and its importance. 

The need for Climate Finance 

Climate change is a global phenomenon that is not restricted to a specific geographic location. Battling it needs a collective effort. In recognition of this, climate finance creates a fund that can be distributed to those, which lack the finances, but by no means conviction to fight climate change. 

Moreover, funds can be distributed more to the areas where the action needed to fight climate change is greater than other regions. 

The Paris Agreement mandates the role of developed countries to assist developing countries in the fight against climate change. It defines a purpose-driven path for them to mobilize funds and resources to the developing countries across channels. 

The net goal of climate finance is to help reduce greenhouse gas emissions by facilitating finance for those without requisite resources. 

Important factors concerning Climate Finance 

With the need ascertained, other essential factors to consider regarding climate finance are: 

  • The form in which the financial aid is provided
  • Whether the financial aid is provided from the public or the private aid. 
  • Whether the recipient is a developed country or a developing country. 
  • Critical to climate finance is the tangible action taken by the recipient towards protecting the environment. 

Organizations with the responsibility of Climate Finance 

Furthermore, climate finance focuses on how these funds are mobilized and delivered to the recipients to achieve sustainable Development Goals or SDGs. 

The global entity that is responsible for the flow of climate finance is Global Environment Facility or GEF. It has been functioning as the entity responsible for the flow of these funds since 1994. 

Furthermore, the Standing Committee of Finance of the SCF is responsible for assisting the COP in operating the financial mobilization of climate finance. 


The action against climate change requires a collective responsibility to take a tangible step towards achieving the SDGs. 

Climate Finance recognizes this need for collective action and defines a framework that facilitates and mobilizes the flow of funds to countries that lack the resources to fight climate change or internally within a country to areas that require urgent action.