International efforts to tackle climate change are at a critical juncture. This report provides a critical review of the climate finance architecture. It examines more than a decade of experience of multilateral climate funds including the Global Environment Facility (GEF), the Climate Investment Funds (CIFs), and the Adaptation Fund (AF). It also considers the experience of national funds created to receive international funding such as Brazil’s Amazon Fund and the Indonesia Climate Change Trust Fund (ICCTF). The authors ask whether the existing architecture is fit for the purpose of delivering finance to the right countries on the scale, terms and conditions required.

The findings draw on the first global ranking of recipients of multilateral climate finance. The authors answer to this question is largely positive. Climate funds have broken new ground by helping countries begin to confront the implications of climate change for development. The finance they spend is targeting countries that need it. Mitigation funding is concentrated in developing countries with relatively high (and rising) greenhouse gas (GHG) emissions, maximising with opportunities for efficient mitigation. Adaptation finance is targeting some of the poorest countries. Against this backdrop, efforts should be made ahead of the Paris summit to ensure that the Green Climate Fund (GCF) is adequately resourced. Recent pledges send a much needed signal to this end: by November 2014 the GCF had raised more than $9 billion, just seven months after its official resource mobilisation process began.

It is noted that there is considerable scope for improvement, however, and opportunities to learn from past experience. The publications provides a number of recommendations for climate funds.

Take more risk, and support innovation.
Support national stakeholders to strengthen policy, regulation and institutional capacity.
Use the right types of finance for the appropriate purpose.
Create new incentives for the institutions, investors and businesses that are shaping infrastructure and development finance choices to step up their efforts to reduce emissions and increase climate resilience through new partnerships.
Understand impact, and set a high bar for the ambition of supported programmes.