This paper first focuses on the poverty and sustainable development issues of climate change, considering the potential and limitations of win-win poverty and environmental options. It concludes by assessing strategies for linking poverty, equity and environmental outcomes.Policy conclusions include‘Equity’ is key to future North-South cooperation in climate change ‘mitigation’. For some North countries, equity means acceptance of emission targets, whereas the South mainly favours an approach based on per capita emission rights.There is an important role for donors in helping the South develop a clear strategy to demand and negotiate more equitable and environmentally effective climate change outcomes.Without urgent action, climate change is likely to undermine the Millennium Development Goal poverty reduction targets, through direct poverty impacts and by slowing economic growth.Mainstreaming climate change into sustainable development policies should improve the quality of growth.The poorest people and countries are most at risk from climate change due to higher dependence on agriculture, vulnerability to diseases and coastal/water resource changes, and lack of capacity to ‘adapt’ or respond to climate change.‘Adaptation’ is regarded as the key poverty issue surrounding climate change. Three new funds have been approved in the UN Framework Convention on Climate Change process, mainly for adaptation in high-risk and poor countries. Many of these countries are preparing National Adaptation Plans of Action.Successful ‘adaptation’ depends on supportive institutions, finance, information and technological support. Disciplinary and institutional barriers mean that the synergies between the climate change adaptation and poverty reduction agendas remain underdeveloped.Donors are keen to support win-win (pro-poor climate change) ‘offset’ projects in the Clean Development Mechanism (CDM) of the Kyoto Protocol, but green market pressures and high transaction costs pose limitations.One of the hopes for pro-poor CDM projects is the development of ethically based CDM investment by northern social and environmental portfolio funds.
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