Mobilising climate finance

Resources for the capacity building necessary to advance the energy transition and sustainable development are frequently fragmented, challenging to access, and inconsistently targeted.

However, the climate investment gap is narrowing, driven by lower costs and rising demand. The CPI’s Global Landscape of Climate Finance 2025 report reveals that, in 2023, global climate finance investment flows hit an all-time high of US$1.9 trillion.

Affordable capital

Despite this positive momentum, current investment levels still fall far short of what is needed to meet climate goals. And access to affordable capital remains a significant barrier to scaling private and domestic climate finance.

Efforts are underway to reduce that barrier.

Launched in May 2025, the Global Capacity Building Coalition (GCBC) accelerator programme is a global initiative that aims to bridge the near-US$2.5 trillion annual financing gap for sustainable development in EMDEs. The accelerator seeks to help mobilise sustainable finance and accelerate the transition to resilient, low-carbon economies by identifying, spotlighting and scaling high-potential capacity-building initiatives and programmes.

The GCBC initiative reflects a growing recognition that building pipelines of investable projects requires more than just capital. It also demands knowledge, coordination and targeted support to strengthen systems from the ground up, says Nicole Pinko, a CPI manager based in Washington DC.

‘It speaks to a larger momentum around capacity building in this local market development and local market focus, and the growing interest in what support and capacity building looks like with a country focus,’ she explains. ‘Rather than coming and saying this is what is offered, it is saying we are here to work with whatever you need.’

Tailored support

Initiatives selected for the accelerator will receive tailored support, including expert advisory services, communications and marketing assistance, partnership facilitation, and operational support to scale and enhance their impact. Those initiatives could include assisting financial institutions in developing their climate capabilities and sustainable finance strategies, building capacity in the enabling environment and improving the knowledge and skills of finance and supporting professionals.

Simon Thompson, managing director at GCBC, says that by supporting a diverse range of initiatives, the accelerator recognises ‘the very different needs and approaches in different regions of the world, countries and sectors. Capacity building is not an end in itself, but a powerful lever to unlock and scale climate and sustainable finance, especially in EMDEs. It is a critical enabler of systems change, investment and sustainable growth.’

In emerging markets, there is a knowledge gap in theory as well as technical capabilities. This is why organisations such as the Carbon Trust provide education around financial instruments such as sustainability-linked bonds and climate transition bonds.

Given that each country’s transition needs differ, Xin Yi Lau, green finance lead for South-East Asia at the Carbon Trust, says the organisation has tailored capacity building materials to its target markets, including the Philippines, to better resonate with the participants. ‘As financing is a means rather than an end, we also focused on helping participants better understand these emerging financial instruments and how they can support the broader transition,’ she says.

Enabling environment

The past 10 years have been the warmest on record. In 2024, global temperatures soared to an average of 1.55 degrees Celsius above pre-industrial levels, making it the first calendar year to exceed the 1.5-degree threshold.

Lau says there is recognition that the broader ecosystem requires capacity building to meet the targets set in the 2015 Paris Agreement to limit global warming to 1.5 degrees. ‘Capacity building serves as an important first step,’ she says but adds that bridging the gap ‘requires governments to establish a conducive regulatory environment and incentives’ and ‘corporates to demonstrate the commercial merits and environmental benefits of their projects’.

Indeed, one of the things the CPI looks for in its proponents is that they are developing an instrument that does not face any significant regulatory hurdles, as this can be a ‘limiting factor’ when building capacity through international projects. ‘One of our criteria is evaluating regulatory barriers,’ Pinko says. ‘You need to have an enabling environment that speaks to a regulatory system that allows for some innovation.’

Level playing field

What has helped here is the rise in regional taxonomies, which ensure everyone agrees on what constitutes a true ‘green’ investment. Lau says these rules – which are essential for creating a level playing field that attracts climate finance investors – help to define thresholds for sustainable projects across different economic activities.

As sustainability-related regulations continue to evolve, she says it is important to tie them more closely with capacity building initiatives such as workshops on national-level taxonomies. ‘This allows market participants the opportunity to seek clarifications, be equipped with technical capabilities to meet regulatory requirements, and through these workshops, connect with other stakeholders.’

At the same time, the push for greater disclosures coming from regulators is also nudging corporates to invest in training their staff on technical topics such as climate reporting. ‘Beyond footprint measurement and target setting, we anticipate growing demand from corporates and financial institutions, especially in emerging markets, which are likely to seek support with developing climate and transition,’ Lau says.