Reforming the Financial Architecture: A UNCTAD Roadmap to $1.3 Trillion for Climate Finance
SDG 13: Climate Action | SDG 17: Partnerships for the Goals | SDG 10: Reduced Inequalities
Ministry of Finance | Ministry of Environment, Forest and Climate Change (MoEFCC) | Ministry of New and Renewable Energy
The UNCTAD Technical and Statistical Report (2025) titled ‘All Roads Lead to Reform: A Financial System Fit to Mobilize $1.3 Trillion for Climate Finance’ argues that the current International Financial Architecture (IFA) is a “broken” system that prevents developing countries from accessing the quality and quantity of climate finance they need. Despite a new global goal to scale climate finance to $1.3 trillion per year by 2035, the report warns that without systemic reform, these pledges risk repeating past failures—specifically deepening debt dependency and widening inequality.
The report identifies three critical structural failures of the IFA:
Financial Instability: Developing countries remain exposed to volatile capital flows and “boom-bust” cycles without access to the same stability tools as developed nations.
Insufficient Development Finance: Available finance is often delivered as debt rather than grants, with only 1.5% of international climate finance currently channeled through specialized UNFCCC funds.
Imbalanced Governance: Decision-making power at the IMF and World Bank remains heavily skewed toward developed economies, leaving developing nations with little voice in the rules that shape their economic futures.
The report presents Baku to Belém Roadmap as a critical opportunity to drive systemic change and ensure equitable finance delivery for climate and development goals. It is a strategic implementation framework agreed upon at COP 29 to guide the transition toward the $1.3 trillion annual goal by COP 30 in Belém. Designed as a work program, it identifies the various levers and concrete reforms needed to accelerate equitable finance delivery.
The roadmap is structured around five priority action fronts (the “5Rs”):
Replenishing: Increasing grants, concessional finance, and low-cost capital.
Rebalancing: Addressing fiscal space and ensuring debt sustainability.
Rechanneling: Optimizing private finance and reducing the high cost of capital.
Revamping: Strengthening capacity and coordination for scaled climate portfolios.
Reshaping: Reforming systems and structures to ensure equitable capital flows.
Policy Relevance
For India, as a leading voice of the Global South and a country with massive climate-resilient infrastructure needs, the call for IFA reform is of paramount importance. The report’s findings align with India’s longstanding position at the G20 and UNFCCC regarding the need for predictable, non-debt-inducing finance for the energy transition.
Strategic Impact for India:
Reducing High Cost of Capital: India’s ambitious Panchamrit targets require trillions in investment; however, the “high costs of capital” identified in the report act as a major barrier to scaling up solar and wind manufacturing.
Reforming Voting Rights: The report’s push to update IMF and World Bank quota formulas directly supports India’s demand for a more representative role in global economic governance that reflects its current economic weight.
Safeguarding Policy Autonomy: By advocating for the removal of “regressive conditionalities” tied to climate loans, the report supports India’s right to pursue indigenous green industrial policies without external interference.
Sovereign Debt Stability: Reform of Credit Rating Agency (CRA) methodologies—a key roadmap item—could help India achieve fairer ratings that account for its climate resilience investments rather than just fiscal austerity.
Follow the full report here: All roads lead to reform: A fi nancial system fi t to mobilize $1.3 trillion for climate finance