“Without systemic reform, climate and development will continue to miss each other.” declares I4CE’s Guillaume POTTIER

As the world convenes in Belém for the COP 30 Climate, the credibility of global climate finance hangs in the balance. In this interview, Guillaume Pottier, Program Director for Climate and Development Finance at I4CE, offers a candid assessment of why incremental reforms can no longer bridge the widening climate–development divide. Speaking ahead of the ESSEC Institute for Geopolitics & Business webinar “Bridging the Climate–Development Finance Gap in a Fragmented World: Pathways to Effective Cooperation on the Road to Belém,” he explains why only a systemic overhaul — from MDB mandates to vulnerability-weighted allocation rules — can restore trust and unlock capital where it matters most. A clear warning emerges: without a time-bound implementation pathway, neither the Paris Agreement nor development goals can be delivered.

1 - Reforming the architecture: from Bridgetown to Seville

The global financial system still fails to align climate and development objectives. Both the Bridgetown Initiative and the Seville Summit on Development Finance urged a transformation of the international financial architecture — debt relief, concessional lending, and MDB capital reform. Yet progress remains incremental. Why is the system so resistant to change, and what political or financial triggers could unlock a new deal for climate and development finance before COP30?

Guillaume Pottier - The twin USD 300 billion and 1,300 billion climate finance goals agreed at COP29 gave us a destination. To complete the deal, we now need a credible pathway to get there. Bridgetown and Seville exposed the same truth: climate and development finance cannot be fixed just by tweaking development aid or marginally improving multilateral development banks. It requires a more systemic rethinking of the international financial architecture: from debt sustainability to fiscal policy and domestic resource mobilization, from regulatory frameworks to international governance, from the IMF and the World Bank to global asset managers, also bringing in the hundreds of publics development banks that represent more than 10% of global investment each year.

To make progress, we need to find new ways of working together on these highly complex issues. For example, the Brazilian COP30 presidency came up with a brilliant idea: convening a circle of finance ministers to break the siloes between climate, finance, and development.

2 - Giving voice to the most exposed: the leverage of the V20

Climate-vulnerable economies are demanding systemic fairness. The “Vulnerable Twenty” group has become increasingly influential, calling for the IMF and World Bank to embed climate vulnerability into their risk and lending frameworks. How do you assess the V20’s growing leverage — and can their push for vulnerability-weighted finance truly reshape global allocation rules?

G.P. - The V20 has become a powerful voice precisely because it frames climate and development as one systemic challenge. Its “Accra to Marrakech agenda” calls for an international financial architecture that delivers real resources - on time, in the right form, and for the right interventions - rather than headline commitments that rarely materialize on the ground.

For vulnerable countries, the quality of climate finance matters as much as quantity.

Current allocation rules may exclude countries whose climate exposure is high but income status masks their vulnerability, such as many SIDS. The adoption of a multi-dimensional vulnerability index at the UN is a first step towards fixing this issue. Some donor countries have also decided to better account for vulnerability: France has set an explicit target for concessional finance to be delivered to vulnerable countries while climate-resilient debt clauses are increasingly proposed. Finally, I would also argue that we need to embed vulnerability at the core of the debt sustainability analyses conducted by the IMF and the World Bank.

3 - Negotiating the next goal: the NCQG and the trust deficit

The New Collective Quantified Goal (NCQG) sits at the crossroads of climate ambition and development justice. Developing countries frame it as a test of credibility after Bridgetown and Seville. In your view, what balance can realistically be struck between ambition and feasibility — and what signals would rebuild North–South trust around this financial compact?

G.P. - Indeed, the NCQG may look like a climate-specific commitment, but it is fundamentally a development commitment as well. Article 2.1c and Article 9 of the Paris Agreement are both about financing low-carbon, resilient development. Climate and development are two sides of the same coin.

As regards the lack of trust across the North-South divide, we first need to acknowledge that there is not one homogeneous “Global North” that fails to deliver on its promises. Last year, the EU provided more that €30 billions of climate finance, most analysts agree that it represents far more than its fair share of the USD 100 billion goal agreed in Copenhagen.

Of course, developed countries’ ability to deliver on the new USD 300 billion goal will be a litmus test for rebuilding trust in the multilateral climate architecture. This will be especially challenging with declining ODA budgets, both in the United States and in Europe. In this context, it will be essential to advance MDB reform, unlock new pools of concessional finance beyond ODA - for example through solidarity levies - and make climate finance both more accessible and more effective.

4 - The “climatization” of ODA: trade-offs or transformation?

Official Development Assistance is being reoriented toward climate-related projects. This “climatization” of aid risks crowding out core development priorities in health, education, or governance. How can donors and recipient countries design ODA strategies that reinforce — rather than distort — the climate–development nexus?

G.P. - First things first, it is crucial to reaffirm that climate and development should not be opposed. Smart and sustainable development must be resilient to climate change, which implies acting on both adaptation and mitigation. Hurricane Melissa, boosted by global warming, wiped 30% of Jamaica’s GDP last week: I am sure that people in Kingston that climate and development are intertwined. Mainstreaming climate considerations in development projects – that is, implementing a “do no harm” approach and aiming to maximize co-benefits – should be a no-brainer.

Beyond mainstreaming, there can exist some tensions between climate and development, especially when allocating scarce concessional resources. It comes from the fact that donor countries have one single budget line for both development and climate finance, a fortiori in a context of decreasing ODA budgets.

To avoid trade-offs, we can think of three solutions. First, use different instruments to achieve distinct goals. Grants should focus on the poorest, and on sectors without any foreseeable return on investment. On the contrary, mitigation finance to wealthier countries should be provided with the minimum possible level of concessionality, and it should focus on lifting barriers for private investment. Second, we should equip developing countries with the right tools and resources to design their own financing plans. The optimal mix of instruments and sectors should not be decided by donors, it should be owned by each country. Third, we need to bet on “poly-solutions”: high-impact investments that address two or three climate- and development-related goals at the same time. Clean cooking, grid expansion or resilient water systems are prime examples of such poly-solutions.

5 - Financing co-benefits: mitigation vs. adaptation

The climate–development payoff differs sharply between mitigation and adaptation. Mitigation projects often attract private capital due to clearer returns, while adaptation remains underfunded and politically invisible. How can finance be structured to value adaptation’s social and economic co-benefits, particularly in climate-vulnerable economies?

G.P. - I would not say that adaptation is politically invisible. it sits at the top of developing countries’ agendas, and COP30’s negotiation on the Global Goal on Adaptation should elevate it even further.

The mixed results of the “billions to trillions” narrative and blended finance movement taught us one thing: spending vast public resources to shift risk-return profiles in the hope of crowding in private capital is not always the right solution.

Adaptation, with its high social and macro-economic returns but limited private profitability, may need to be financed primarily by concessional public money, either through domestic public investments, including through national development banks, or through the international climate finance architecture.

6 - Mobilizing private finance: beyond the coalition fatigue

Private climate coalitions have lost momentum under geopolitical pressure. Initiatives like GFANZ or the OPSWFT, once central to the climate finance ecosystem, now struggle with credibility and fragmentation. Is there a viable path to re-engage private investors at scale — or must the public sphere reclaim its catalytic role through guarantees and risk-sharing mechanisms?

G.P. - The stalling of voluntary coalitions like GFANZ shows that we need other levers to mobilize private finance at scale for climate and development.

Shifting incentive structures through blended finance and public-private partnerships may be one solution. However, we also needs to address deeper obstacles to private sector mobilization: macro-prudential rules that penalize long-term investment in EMDEs, insufficient pipelines of bankable low-carbon projects, fragmented and non-interoperable taxonomies, and limited availability of guarantees and risk-mitigation tools.

The Baku-to-Belém Roadmap and the rightly target these issues and propose interesting solutions. Once again, credible implementation pathways will be key to deliver results.

7 - Empowering multilateral banks: from incremental to systemic reform

Multilateral Development Banks are at the core of the climate–development finance nexus. The G20 and Seville Summits both called on MDBs to “do more with less” — expanding concessional lending, adjusting capital adequacy rules, and leveraging callable capital. What reforms would genuinely allow MDBs to act as global accelerators for low-carbon, resilient development?

G.P. - The world needs MDBs that are bigger, better, and more effective. The reform menu is already available - from capital adequacy to callable capital, from streamlined processes to internal coordination, from the update of mandates to the update of results frameworks.

What is missing is political will and a structured implementation timeline. The most immediate win would probably be to keep pushing MDBs to take more risk. S&P recently revised its methodology to assess MDBs, it shows that they could collectively deploy an additional USD 600–800 billion of lending while maintaining their AAA ratings.

Yet this requires navigating a shifting political landscape, especially as the new US administration questions MDBs’ “mission creep” and their shift from poverty to climate or gender. Reframing climate action as smart, resilient development - and building coalitions of like-minded shareholders across traditional divides - will be essential to unlocking real change.

8 - Reconnecting climate ambition with development realities

The road to Belém must deliver outcomes that speak to both climate urgency and development equity. If you had to define one tangible breakthrough for COP30 that would operationalize the climate–development finance nexus — especially for the most vulnerable economies — what would it be?

G.P. - Process is policy. If I had to synthetize all the progress that needs to happen in Belém under one tangible outcome, I would argue that COP30 needs to deliver a clear, time-bound implementation pathway based on a selected number of high-impact, high-feasibility measures listed in the Baku to Belem Roadmap and the Circle of Finance Ministers report. To be effective, this implementation pathway should be agreed by the largest possible number of parties, starting with G20 countries. It should set precise intermediary milestones and establish a robust monitoring mechanism. We do not need new ideas, we need to focus on delivering impact, both for development and climate action.

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