“Without a new global financial architecture, neither the Paris Agreement nor the SDGs can be credibly delivered,” warns UNSDSN’s Guillaume LAFORTUNE

As the world moves from Baku to Belém, global climate finance faces its most important credibility test since Paris. In this interview, Guillaume Lafortune, Vice-President of the UN Sustainable Development Solutions Network (SDSN), offers an unvarnished assessment of what it will take to bridge the climate–development divide at a moment of geopolitical fragmentation and fiscal fatigue. 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 outlines why the current model of development finance is collapsing — and how bold reforms to global financial architecture, Loss & Damage funding, and solidarity levies could unlock a new era of high-impact climate investment. A candid conversation on justice, credibility, and the power of ideas in a fractured world.

1 - Setting the stage: from Baku to Belém, a credibility test for global climate finance

The road from Baku to Belém is not just a countdown to COP30 — it’s a credibility test for the Paris Agreement itself. The NCQG aims to mobilize around $1.3 trillion a year for climate action by 2030. But beyond the headline figure, what are the core tensions — fairness, accountability, or burden-sharing — that risk stalling this negotiation? And what would a genuinely equitable deal look like from a development perspective

Guillaume Lafortune - There are three broad categories of climate finance: mitigation, adaptation, and Losses and Damages (L&D). In terms of major priorities at this COP30, on climate mitigation, it is now critical to be serious about phasing out fossil fuels and this, in turn, requires massive investments in alternative energy sources, notably in developing countries.

Adaptation and L&D are also essential. Hurricane Melissa, which hit Jamaica at the end of October 2025, is a reminder of the catastrophic humanitarian impact of the increased frequency and intensity of natural disasters, in part due to accelerated climate change. These extreme weather events, but also sea level rise and other slow-onset events, tend to hit poor and vulnerable countries, which are the least responsible for climate change. It remains critical to share fairly and globally the burden of financing for adaptation and L&D costs from anthropogenic activities, among responsible countries.

The opposition of the largest historical emitter of GHGs - the United of America - to the Paris Climate Agreement and the SDGs and the geopolitical tensions which put additional pressures on public finances, including in Europe, and distract the attention of policymakers are of course potential obstacles for collective and ambitious climate action. Still, I am confident that “coalitions of the willing” can emerge, as we saw in June 2025 with the adoption of the Seville Commitment on Financing for Development. The leadership of countries such as Brazil and China is also very positive.

2 - When aid contracts, ambition collapses: the development cost of the ODA backlash

In 2025, global ODA fell by 7%, precisely when developing economies needed it most to finance a green transition. How is this erosion of public support affecting countries’ capacity to decarbonize while still growing? Is the idea of “sustainable development” — green, inclusive, and resilient — being undermined by both fiscal fatigue in the North and political backlash against climate spending?

G.L. - It is probably the end of the Official Development Assistance model as we knew it since the 1970s. The key now is to focus on the broader reform of the Global Financial Architecture (GFA), which basically corresponds to the complex system of public and private finance that channels the world’s savings into global investment.

The SDG financing gap in developing countries corresponds to $4 trillion USD per year, according to UNCTAD. This is 4% of the World’s Output and a fraction of the World’s Savings which can be used to invest in climate action and sustainable development. But financial flows do not flow enough to the countries and investments that are needed for sustainable development. Unfortunately, half of the world’s population lives in a country that spends more on interest payments each year than on health or education. The lack of fiscal space at the country-level is a major obstacle to achieving climate and sustainability goals.

There are many options on the table to reform the GFA, including scaling-up the paid-in capital and disbursements of Multilateral Development Banks, rethinking credit risk ratings, introducing global solidarity levies (on shipping, aviation, financial transactions, historical emissions) and scaling-up concessional and bilateral finance and partnerships via notably large-scale infrastructure investment initiatives for instance via the European Global Gateway or the Chinese Belt and Road Initiative.

3 - Rethinking the nexus: aligning climate ambition with development priorities

Too often, the climate and development agendas advance on parallel tracks rather than intersecting paths. What institutional or financial mechanisms could better integrate the SDGs and the Paris Agreement — ensuring that climate finance also delivers on human development, job creation, and social resilience?

G.L. - It is dangerous to oppose climate action and poverty alleviation (or the advancement of other social outcomes like health or education). Climate disasters and biodiversity loss have direct social and humanitarian consequences. We should tackle both at the same time, and this is why the paradigm of sustainable development epitomized by the Sustainable Development Goals (SDGs) remains, in my view, a very useful paradigm that we should pursue collectively by 2030 and beyond 2030.

On economic opportunities, a recent report published by SYSTEMIQ in partnership with many other organizations estimates that investing in resilience (the result of adaptation) could create 280 million jobs across emerging markets and developing economies by 2035, while boosting GDP and unlocking a trillion-dollar market opportunity.

4 - Addressing vulnerability and justice: Loss & Damage as a political litmus test

The Loss & Damage Fund stands at the intersection of climate justice and development solidarity. Can this fund evolve from symbolic compensation to a stable financial pillar of the climate–development nexus? And how might it complement, rather than compete with, adaptation finance or the NCQG framework?

G.L. - The topic of Losses and Damages (L&D) was at the heart of COP28 in Dubai in 2023. It was decided back then to create an 800 million L&D fund hosted at the World Bank. In reality, the needs are probably in billions, perhaps between 150 and 300 billion per year by 2030 according to the International High Level Expert Group on Climate Finance (IHLEG). This is a matter of climate justice: countries that are historically more responsible for climate change should bear a fair share of global climate costs to adapt and to pay for the increased losses and damages attributed to human-induced climate change.

As we argued in our 2023 Working Paper, this should, of course, be accompanied by the development of long-term resilience and sustainable development pathways, including medium-term investment frameworks, in highly vulnerable countries and other countries.

5 - Reforming global finance: the Seville momentum and the MDB challenge

The Seville Summit on Development Finance reignited calls to modernize the Bretton Woods institutions. How can reforms to multilateral development banks — capital adequacy, concessional lending, or new credit-risk frameworks — turn them into engines of both climate action and development? And what role should the United Nations play in sustaining this “Seville momentum” toward COP30?

G.L. - Multilateral Development Banks (MDBs), including the World Bank, the Asian Development Bank, the Inter-American Development Bank, the African Development Bank and many others play a key role in providing access to more long-term and affordable capital to invest in critical infrastructure needed to achieve sustainable development. MDBs tend to have excellent credit risk ratings (typically “AAA”) and therefore benefit from more favorable borrowing conditions than their individual member countries (which are sometimes “junk” rated).

Also there is often significant value in considering investments in clean energy systems, grids, or digital infrastructure at the regional level, and operating at the regional level such as ASEAN, Latin America, or the European Union to generate economies of scale. MDBs are well positioned to support such regional investment initiatives. Scaling up the paid-in capital and disbursements of MDBs without deteriorating their credit risk ratings is therefore a critical priority in the reform of the GFA.

In addition to MDBs, the coordination of Public Development Banks (PDBs) to advance sustainable development is also critical and here we should commend the work done by the Agence française de développement (AFD), notably via the Financing in Common Coalition (FICs).

6 - New solidarity for a fragmented world: the case for global levies

In a world fractured by geopolitical competition, fiscal solidarity has to be re-invented. From taxes on fossil fuels and aviation to levies on global trade, several proposals have resurfaced to fund climate and development goals. Are these ideas politically viable — or do they remain the last utopia of multilateralism?

It is the role of civil society and academia to continue pushing for viable solutions even if they seem, at least initially, inapplicable in practice. As emphasized by the British economist John Maynard Keynes in the last paragraph of the General Theory in 1936, “[...] soon or late, it is ideas, not vested interests, which are dangerous for good or evil.” What Keynes means is that vested narrow interests can resist change in the short run, but in the long run, it is the power of ideas that defines how societies are organized and how policies are made.

The Global Solidarity Levies Task Force set up after the 2023 Summit for a New Global Financing Pact hosted in Paris has put forward a number of concrete proposals to scale up global solidarity levies to support climate action and sustainable development. There are many options on the table, including levies on the shipping and aviation industries, which might be achievable in the near term. Other possibilities include global solidarity levies on financial transactions, fossil fuel extraction or profits, historical carbon emissions, and billionaires (among others). These can make a big difference. As one example, the IMF estimates that a carbon tax on international transportation emissions (including aviation and shipping) could bring in up to $200 billion per year by 2035.

In addition to thinking about mechanisms for global solidarity levies, it is also critical to think very concretely about how the revenues of these levies will be used and who will benefit in priority from these revenues. This is an important topic of discussion in the coming months and years.

7 - Shifting the narrative: from climate finance as duty to climate investment as opportunity

To bridge the North–South divide, the narrative must change — from obligation to opportunity. How can developing economies position themselves as credible destinations for sustainable investment, attracting private and blended capital flows that serve both growth and decarbonization?

As we argued in the 2025 Sustainble Development Report, sustainable development should be viewed as a high-return activity. If financial markets are well designed, they can direct the world’s savings not just to rich countries, but especially to poorer ones that have the potential to grow quickly. It is encouraging that many emerging and developing economies are already growing faster than high-income countries — a trend known as “economic convergence”. With well-functioning global financial markets and better local institutions to reduce investment risks and guide funds toward social, economic, and environmental goals, the world’s annual savings — roughly equivalent to $30 trillion USD annually — could increasingly flow to where they are most needed, helping the poorest countries reach their potential.

8 - Reinventing multilateralism: the UN at 80 and the future of global finance

As the United Nations turns 80, its capacity to deliver on the SDGs and the Paris Agreement is under scrutiny. Could the UN system itself innovate financially — through pooled funds, capital instruments, or new financing windows — to directly support countries bridging the climate–development divide in this age of fragmentation?

On the role of the United Nations, it is interesting to observe that, one one hand, we seem to have a growing number of global challenges which require global coordinated actions (climate change, international security, new technologies, pandemics, etc.) and, on the other hand, that the whole UN80 initiative and UN reform is largely an agenda focusing on efficiency in a context of tight budget constraints.

The UN’s core regular annual budget is equivalent to about $3.7 billion USD, far less than the operational budget of major cities like Paris or New York. On top of that, some large countries tend to pay their dues late or threaten to cut funding altogether. Finding solutions to finance the UN system properly is therefore also critical to address the global challenges of our time.

In the end, Nation-states remain at the heart of the UN system. The United Nations can only function if Nations want to be united. SDSN’s Index of countries’ support for UN-based multilateralism tracks annually the support of all UN member states to the UN system, including notably the ratification of major UN treaties, membership in key UN organizations, and whether countries pay their financial dues in full and on time.

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