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The 4th International Conference on Financing for Development comes at a critical moment for climate and development finance. Despite progress—such as increased climate funding over the past years, the establishment of the Loss and Damage fund, and the inclusion of climate targets in the World Bank’s mission—important challenges persist and remain unresolved. The negotiations on the New Collective Quantified Goal on Climate Finance (NCQG) under the UNFCCC last year presented a crucial opportunity to lay the foundation for a future looking framework—one that strengthens resource allocation, access, efficiency, and transparency in international public climate finance. However, challenging and politically charged negotiations in Baku revealed deep divisions: while many argued for an ambitious scale-up to the trillions, developed and developing countries clashed over what was both realistic and sufficient. Ultimately, the decision to triple the previous target to USD 300 billion per year by 2035—sourced from public, multilateral, and private contributions—has been criticized by developing nations, especially given that the NCQG falls short in addressing some critical quality criteria for climate finance such as concrete targets for grant-based finance or climate access targets. More recently, the IMF/World Bank Spring Meetings showed that climate issues are at risk of being sidelined due to pressure from the new Trump administration. Now many eyes are turning to the conference in Seville for a new impetus for the climate finance agenda.
Key issues likely to reignite unresolved NCQG debates in Seville
The UNFCCC and Paris Agreement highlight the link between climate change, sustainable development, and poverty eradication, yet aligning development cooperation with climate commitments remains challenging. The tough negotiations in Baku foreshadow key debates at FfD4 in Seville, where unresolved issues reappear in the first draft of the FfD4 Outcome Document.
A first issue relates to the additionality of development and climate finance. The NCQG decision weakened the ambition of the 1992 Rio Convention by excluding provisions that would ensure that climate finance is new and additional to Official Development Assistance (ODA), following opposition from developed countries. In their inputs to the Elements paper for the FfD4 conference, developing country groupings—including the G77 plus China, the LDCs, and the African Group—stressed the need for a clear separation between development and climate finance and reiterated this request in the ongoing FfD4 negotiations. Their central concern is that without this separation, funds earmarked for long-term sustainable growth and poverty eradication could be diluted or redirected, undermining the specific goals of each financing stream. The first draft of the FfD4 Outcome Document reaffirms the commitment to achieve the NCQG but also appears to reopen the discussion by incorporating provisions for a commitment to provide new and additional financial resources for climate (and biodiversity). With the ongoing decline in ODA budgets—driven not only by the dramatic closure of USAID but also by broader budget cuts across other OECD countries—the commitment on additionality is unlikely to garner much support among developed nations, further straining their relationship with the G77.
A second issue concerns the insufficiency of the USD 300 Billion target. The “Baku to Belém Roadmap to 1.3T”, introduced by Colombia in the final stages of the NCQG negotiations and backed by an alliance of developing nations, aims to scale up climate finance for developing countries in response to COP29’s limited progress and the NCQG’s shortcomings. Yet, submissions to the UNFCCC indicate that developed countries—such as the EU, the UK, and Japan—view the roadmap primarily as a means to enhance private climate finance by aligning global processes (like the G20 and FfD4), rather than initiating formal negotiations or revisiting the NCQG decision. The Roadmap also does not feature in the draft FfD4 Outcome Document. Yet, several countries and groupings, including the UK, the Environmental Integrity Group (Mexico, Liechtenstein, the Republic of Korea, Switzerland, and Georgia), Morocco, and Vanuatu, reference the FfD4 in their submissions to the UNFCCC. Vanuatu’s submission, in particular, emphasizes this link in relation to the transformation of the global economic system and improving the quality of climate finance. Overall, developing countries view the core aim of the Roadmap as enhancing access, establishing clear criteria for defining climate finance, ensuring that funding is new, additional, and affordable, and addressing Loss and Damage.
Building blocks for a strengthened shared climate and development finance agenda
As evidenced by the statements of country grouping representatives in the FfD4 negotiations, the same irreconcilable positions persist—mirroring those seen in Baku and throughout the NCQG negotiations. While a major breakthrough in Seville appears unlikely, we identify three key building blocks where progress is feasible and where political attention should be directed:
- Improving access to climate finance: Access to finance remains a recurrent challenge, as reflected in development finance discourses and prioritized in the FfD4 agenda. Enhancing effectiveness and reducing fragmentation are considered central to the future of delivering development finance, with significant implications for access at both national and local levels. A commitment to strengthen coherency across financial mechanisms—such as those of the UNFCCC and the Convention on Biological Diversity (CBD)—must be paired with efforts to integrate common justice principles to improve the effectiveness of both climate and development finance.
- Enhancing transparency in ODA and climate finance reporting: There are no safeguards to ensure transparency or prevent the creative accounting and double-counting of development and climate finance under the NCQG. FfD4 could be instrumental to improve accountability, e.g., through the proposal in the draft FfD4 Outcome Document for an intergovernmental working group and cooperation of this group with the Standing Committee on Finance (SCF) under the UNFCCC. In this context, key priorities should include: (1) developing qualitative frameworks to monitor and assess the impact of climate-related interventions; and (2) establishing triangulation of climate finance data reported by donors, recipient governments, and third parties through the SCF.
- Elevating loss and damage finance priorities: a major challenge in the NCQG negotiations was the unfulfilled request by developing countries for an explicit target on loss and damage finance. After 30 years of climate negotiations, parties agreed in 2022 to establish new funding arrangements and a dedicated Fund for Responding to Loss and Damage (FRLD). However, to date, the fund has only received USD 765 million in pledges. Robust language on loss and damage finance in the FfD4 Outcome Document can send a positive political signal from developed countries. For example, a stronger commitment is needed to bolster the capacity of existing national mechanisms to channel international loss and damage finance to sub-national levels, especially in LDCs – an area where wider climate and development finance sources could play complementary roles.
To ensure a successful linkage between climate and development finance, it is crucial to send positive signals that these financial mechanisms are not on the brink of collapse. Instead, nations committed to meaningful reform should unite as frontrunners—a coalition of the willing ideally across developed and developing country groupings—to drive progress. While global political uncertainty is stalling ambitious reforms, it is vital that these years are not wasted for countries urgently needing support to pursue climate-resilient development. The FfD4 conference represents a pivotal moment to provide direction and foster constructive, rather than confrontational, discussions.
This blog post is part of a series on the 4th FfD conference by the German Institute of Development and Sustainability (IDOS). Please also read the previous contributions to this series:
- FfD4 Countdown: A Watered-Down Proposal on Tax Expenditures Risks Undermining Countries’ Domestic Revenue Mobilization, by Alexandra Readhead, Agustin Redonda, Christian von Haldenwang, Giovanni Occhiali, and Hazel Granger
- Investment Facilitation for Development: What Should FfD4 Deliver?, by Axel Berger and Zoryana Olekseyuk
- Frozen in time: How to rethink the role of foreign aid in FFD4, by Heiner Janus
- The Group of 77 in the FfD negotiations, by Anna Novoselova
- How Seville Can Sow the Seeds for a New Spring: Financing (Sustainable) Development Must Turn Universal!, by Adolf Kloke-Lesch
- Trump and FfD4 – the Elephant in the Room Starts to Speak (and Destroy), by Sören Hilbrich, Yabibal Walle, and Clara Brandi
- Rationalising Tax Expenditures – a Core Element of Financing for Development, by Christian von Haldenwang and Agustín Redonda
- Forging Consensus: Navigating Trade Controversies in the FfD4 Zero Draft, by Clara Brandi
- Cumbersome but Essential – The United Nations Financing for Development Process Ahead of its 4th Conference, by Kathrin Berensmann, Clara Brandi, Sören Hilbrich, and Yabibal Walle
All blogs express the views of the author(s).
