Devex Invested: At COP30, all eyes turn to private finance in adaptation push

This week at the 30th United Nations Climate Change Conference in Belém, Brazil, nations are negotiating a potential new adaptation finance goal that could triple the annual amount to $120 billion if low- and middle-income nations get their way.

For years, finance aimed at helping communities reduce the risks and harm from climate disasters — known as adaptation finance — has been treated as the unglamorous cousin of mitigation finance: necessary, but impossible to monetize. However, at COP this year, that script is shifting. Country delegates, financiers, and development agencies are suddenly talking with unusual confidence about the investability of adaptation, pointing to blended structures, guarantees, and insurance-linked products they argue could unlock large pools of private capital.

“This COP needs to be about how scarce public resources can unlock private finance,” Patrick Verkooijen, CEO of the Global Center on Adaptation, tells Jesse.

That enthusiasm was echoed across the conference hallways. “Adaptation has often been perceived as only amenable to public finance, and that is inaccurate,” says Ali Mohamed, Kenya’s special envoy for climate change.

But behind the buzz, the fundamentals of adaptation investment haven’t changed: Most adaptation projects still struggle to produce the reliable revenue streams, low-risk profiles, or returns that private investors require. Their benefits are local, long-term, and hard to quantify.

“Adaptation avoids financial losses,” Debbie Hillier, head of the Zurich Climate Resilience Alliance Program at Mercy Corps, told Devex. “So if you’re a government, the economic case is clear and adaptation makes sense. But if you’re a private sector company, why would you pay for what is essentially a public good?”

But as the effects of climate change become too big and pressing to ignore — more frequent devastating floods and storms, more drought, and sea-level rise — adaptation is increasingly viewed not only as a humanitarian imperative, but as a critical pillar of sustainable development and global economic stability.

Read: Can climate adaptation attract private capital? COP30 delegates think so

Keep up with COP: Reporters’ notebook — Day 8

+ Tomorrow at 12 p.m. ET (6 p.m. CET), Devex Editor-in-Chief Raj Kumar will sit down with World Resources Institute CEO Ani Dasgupta to look at what strategies work in the field of climate funding. Save your spot now.

Financial fiesta

In the un-airconditioned pavilion rooms that dot the front entrance of the COP30 Blue Zone, a few financial innovations are being launched.

A major new global guarantee platform designed to help public development banks tap capital markets launched on Friday, and Jesse got the scoop. The $10 billion Public Development Bank Guarantee Hub — backed by the International Development Finance Club, the Multilateral Investment Guarantee Agency, Finance in Common, and the NDC Partnership — will provide full guarantees for first-time green or sustainable bond issuances, along with technical assistance to help banks meet reporting and governance standards. The goal is to double the number of PDBs able to access capital markets by 2030 and dramatically expand the pool of private finance available for climate and development priorities.

By reducing risk and lowering the cost of capital, the platform aims to help smaller, domestic development banks boost their credit ratings and lending capacity — a major shift at a time when concessional finance is flat and vulnerable countries are struggling to fund climate action. Early participants include development banks in Rwanda, Colombia, Indonesia, and Uganda, with donors and philanthropies expected to provide an initial $1 billion in grant funding before concessional guarantees scale up support.

Scoop: Guarantee platform aims to unlock more finance for development banks

Be prepared

Just down the hall, the Inter-American Development Bank, Development Bank of Latin America and the Caribbean, and the Caribbean Development Bank — or IDB, CAF, and CDB, respectively, to those who love initialisms — launched the Multi-Guarantor Debt-for-Resilience Joint Initiative, a new regional effort to help Caribbean countries strengthen disaster preparedness while easing debt burdens.

The initiative aims to leverage guarantees from multilateral development banks and private sector partners to allow countries to invest in resilience — before disasters hit and without adding new debt. It will focus on scaling debt-for-resilience swaps, improving coordination among development banks and governments, and boosting transparency to attract investors.

The three institutions plan to establish a framework for guarantee terms, shared taxonomies, and key performance indicators for resilience investments. Each debt swap under the initiative will include a regional public goods component, designed to bolster collective climate resilience across the Caribbean.

Loss and damage finds its feet

One year after stepping into a job with “no staff, just by myself,” Ibrahima Cheikh Diong arrived at COP30 with something real to show: The U.N.’s new Fund for responding to Loss and Damage is officially open for business. Backed by roughly $800 million in initial pledges, the fund launched its first call for proposals last week — a milestone that board member Elizabeth Thompson called unimaginable not long ago, when funding for climate loss and damage was viewed as “something impossible, something that would never happen,” my colleague Ayenat Mersie reports.

But turning that breakthrough into impact will be far harder. The Barbados-led negotiations that produced the fund’s first work plan nearly collapsed until Thompson threatened to lock board members in a room until they reached a decision. The result — $250 million in grants for the most vulnerable low- and middle-income countries — is “a drop in the ocean,” as youth advocates noted, compared to the hundreds of billions needed. And of course, that ocean is rising.

Diong, who says “you cannot be too technical when people are actually dying,” now faces the challenge of scaling the fund, expanding its secretariat, and finding long-term, predictable resources in a fractured geopolitical moment. His pitch is straightforward: Keep the fund country-led, keep the support grant-based, and help nations as climate disasters intensify.

Read: Inside the loss and damage fund’s first year — and what comes next (Pro)

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South Africa’s G20 moment

Meanwhile, across the Atlantic, South Africa’s historic turn at the helm of the G20 culminates this weekend as world leaders gather in Johannesburg — and the stakes couldn’t be higher. The first G20 Leaders’ Summit ever held on African soil comes at a moment of geopolitical fracture and weakened multilateralism. South Africa’s priorities have been clear all year: A focus on solidarity, equality, and sustainability. The question now is whether those priorities can survive a summit clouded by a U.S. political boycott and deep divisions.

One of the key issues will be debt, and while G20 finance ministers recently managed to produce their first debt declaration since the pandemic, critics argue that it falls far short of what's needed to tackle the debt crisis.

Complicating matters is the U.S. decision to fully skip the summit — a move that could either ease consensus among remaining members or undermine any communiqué’s legitimacy. Yet experts say South Africa has succeeded in giving the continent a stronger voice inside the G20, even amid tense negotiations on climate, taxation, and global governance reform.

Our colleague Elissa Miolene will be covering the summit and surrounding events. Will you be there? Send her a message at elissa.miolene@devex.com.

Read: What are the key issues at stake at the G20 summit in South Africa?

Stay updated: G20 reporter's notebook — the Social Summit Day 1

Background reading: G20 recommits to debt relief — but critics say it’s far from enough

MCC’s major reset

The Millennium Challenge Corporation has changed the criteria it uses to determine which countries qualify for its large grants, often worth hundreds of millions of dollars.

The scorecard that MCC uses to assess countries has often been considered sacrosanct, and so these changes are significant — though it’s not entirely clear how they will impact who gets MCC funding in the future. It also comes as the agency tries to navigate its role amid the Trump administration’s foreign aid and foreign policy objectives, especially after it faced potential elimination earlier this year. 

The new scorecard has 22 indicators, up from 20, and it has changed the so-called hard hurdles required to qualify — such as easing the corruption indicator, which had prevented many countries from qualifying in the past. That means Ukraine and several Latin American countries that fell short only on corruption could now pass.

This change may raise some questions, and some countries seem potentially negatively affected, particularly by the shift to a larger number of indicators. But some experts say it is a long time coming: For more than a decade, many have criticized the corruption indicator as inaccurate and overly restrictive.

Read: Millennium Challenge Corporation changes country selection criteria 

What we’re reading

Denmark to cut IAVI funds, prioritizing multilaterals over smaller grants. [Devex]

Investment flows to the net-zero transition: Progress and policy needs. [Principles for Responsible Investment]

Argentina’s $870 million boost of IMF assets suggests U.S. aid. [Bloomberg]