auctusESG | Insights | September H1 2025

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Accelerating global sustainable finance & climate transition

Published Sep 15, 2025

Data dashboard

The chart shows that multilateral development banks (MDBs) scaled up their climate finance to record levels in 2024, with total flows reaching nearly US $136.6 billion. Low- and middle-income economies accounted for the largest share at US $85.1 billion, up sharply from US $74.7 billion in 2023, driven primarily by the World Bank Group (WBG) and Asian Development Bank (ADB). High-income economies received US $51.5 billion, with the European Investment Bank (EIB) leading disbursements.

This trajectory reflects a strong emphasis on directing resources to emerging and developing countries, where climate vulnerabilities are greatest, while also sustaining support for decarbonisation and resilience in advanced economies. The World Bank’s contribution of over US $41 billion highlights its pivotal role, while regional banks such as the ADB, AfDB, and IDB are expanding their portfolios.

MDBs are now the single largest source of international public climate finance, yet demand still far outpaces supply. Bridging this gap will require mobilising private capital at scale, leveraging concessional finance, and innovating with blended structures to ensure that finance flows match both the urgency and equity dimensions of the global climate challenge.

News roundup

EU to review 2035 zero-emission vehicles target earlier

The European Commission will bring forward its review of the 2035 zero CO₂ emissions target for new cars and vans, shifting the assessment from 2026 to the end of this year. The move comes as automakers warn that a full transition to electric vehicles may be difficult without added flexibility.

The decision signals the EU’s readiness to consider transitional options such as CO₂-neutral fuels, plug-in hybrids, or exemptions for smaller manufacturers. It reflects a pragmatic balance between ambitious climate goals and the economic and technological pressures facing Europe’s automotive sector.

Canada may scrap oil sector emissions cap if alternate abatements secured

Canada is considering dropping a federal cap on emissions from the oil and gas sector, currently aiming for 137 million metric tons by 2030, as part of a broader “climate competitiveness strategy.” The cap would only be removed if the oil industry and the province of Alberta commit to other strong emissions-reduction measures, including projects such as carbon capture.

The move suggests a shift from fixed regulatory limits to more flexible, outcome-based climate policy, emphasising investment and results over strict caps. It signals Ottawa’s willingness to balance environmental goals with industry and regional economic concerns.

Poland to pilot direct air capture unit in Kielce powered by solar

Kielce in southeastern Poland will soon host the country’s first direct air capture (DAC) facility, a pilot jointly developed by the municipal government and firm Oraquel S.A. The solar-powered installation is expected to remove about 500 tonnes of CO₂ annually, equivalent to emissions from roughly 70 coal-stove households and also serve as a public education hub.

This move suggests Poland is testing how carbon removal tech can be integrated locally, despite its reliance on coal, to meet EU decarbonisation imperatives. It underscores growing interest in small-scale, renewable-powered emissions solutions and in engaging citizens as part of climate mitigation strategies.

Spotlight

Adaptation Finance and the Private Sector: Unlocking Resilience for Developing Countries

Climate adaptation is often described as the “missing middle” of climate finance. While developing countries face adaptation needs exceeding US $320 billion every year, less than a fraction of that is being met. The biggest shortfalls are in coastal protection and water systems (US $120 billion annually), followed by infrastructure (US $80 billion) and agriculture and fisheries (US $60 billion). Yet even sectors like health, disaster risk reduction, and social protection—so vital for community resilience—remain chronically underfunded at US $40 billion.

The scale of the challenge is daunting. In 2023, global climate finance flows reached US $1.9 trillion, with private investors contributing more than half. But here’s the catch: only 3.4% (US $65 billion) went to adaptation. And of that, private capital made up less than 2%. Unlike mitigation—where renewable energy and clean transport offer clear returns—adaptation projects often struggle to attract investors. The reasons are structural:

a) Weak revenue models: Adaptation often delivers public goods (for example, flood protection, drought resilience) with no clear cash flow. Where revenue exists, insurance payouts, ecosystem services, it is usually small or uncertain

b) High transaction costs: Projects are small, fragmented, and context-specific, driving up design and monitoring costs and discouraging investors seeking scale

c) Limited scalability: Locally effective solutions are difficult to replicate across geographies due to differing ecosystems, data gaps, and regulatory contexts, reducing investor appetite

d) Underdeveloped policy frameworks: Unclear regulations, lack of adaptation taxonomies, and weak incentives in LICs and LMICs increase risk perception, slowing pipeline development and private investment

So where does the opportunity lie?

Across Southeast Asia, innovative models are showing how private finance can be mobilised for adaptation.

In Cambodia, Amru Rice tapped a US $10 million IFC loan to expand organic exports and climate-smart farming, strengthening resilience in smallholder supply chains
In Indonesia, agri-tech firm eFishery is working with 55,000+ farmers, combining smart feeders with fintech services to stabilise incomes against climate variability
In Viet Nam, Camimex's mangrove–shrimp farming model, backed by EU buyers and a national Payment for Forest Ecological Services (PFES) scheme, is turning nature-based solutions into investable ventures
And in the Philippines, microfinance loans channelled through Build Change are helping households retrofit homes for climate resilience, proving that even small-ticket financing can deliver systemic impact.

At the institutional level, blended finance platforms are starting to move the needle. The Cambodia Climate Finance Facility (US $100 million) enables local banks to fund adaptation projects by combining concessional credit with technical support. Meanwhile, Climate Investor Two, a global blended fund, has already mobilised US $875 million for water and resilience infrastructure across Southeast Asia.

What's needed to scale adaptation finance?

Blended finance structures that reduce risk and attract institutional investors
Catalytic capital from philanthropies and development banks to unlock private flows
Domestic financial innovation, from resilience bonds to microfinance, to create investable revenue streams
Robust policy frameworks, like VietNam’s mandatory mangrove integration or the Philippines’ catastrophe risk insurance, that de-risk markets and crowd in private players. Frameworks like National Adaptation Plans, lay out clear national priorities and pipelines, helping reduce uncertainty and crowding in private investors
And critically, support for LICs and LMICs, where concessional finance is essential to lower barriers for local banks and businesses

The bottom line: Adaptation finance is still the least-supported pillar of climate action, but the tide is turning. By reframing adaptation as an investable agenda, the private sector—working alongside public and concessional capital—can help close the finance gap. Doing so is not just about risk management. It’s about building resilience, protecting vulnerable communities, and driving sustainable growth in the world’s most climate-exposed regions.

Zurich Climate Resilience Alliance IFC - International Finance Corporation Oxford Policy Management FCDO

Featured events

Climate Week New York City (NYC) 2025, 21-28 September 2025, New York City

Climate Week NYC 2025 is the United States’ premier climate action week, bringing together business, government, UN agencies, academic, and civil society leaders to pursue a net-zero, nature-positive, and resilient world. With over 900 climate-focused events across New York, the events will feature workshops, executive roundtables, exhibits, and networking on topics including renewable energy, adaptation and resilience, sustainable infrastructure, climate finance, and ESG disclosure.

The gathering is expected to catalyse cross-sector collaboration, spotlight innovation in nature-based solutions and sustainable public health responses and strengthen global policy momentum toward climate targets. It signals growing urgency for transparent climate action, greater private-public investment, and inclusive solutions to tackle climate risk.

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