Rich Nations Profiteer from Climate Crisis: 65% of Aid to Global South is Debt-Inducing Loans
SDG 13: Climate Action | SDG 10: Reduced Inequalities
Institutions: Ministry of Environment, Forest and Climate Change (MoEFCC) | Ministry of Finance
The Climate Finance Shadow Report 2025, released by Oxfam and CARE, finds that wealthy nations are treating climate finance as a business opportunity, severely hindering climate action in the Global South. The report claims that while rich countries mobilized a reported $116 billion in 2022, the true value, once factoring in non-concessional terms, is only about $28β35 billion, less than a third of the pledged amount. Crucially, 65% of this funding is delivered as loans, often at standard interest rates. As a result, for every $5 developing countries receive in climate finance loans, they are repaying an estimated $7, creating a 42% βprofitβ for creditor nations and exacerbating the debt crisis (now at $3.3 trillion).
Least Developed Countries (LDCs) and Small Island Developing States (SIDS) are disproportionately affected, receiving only 19.5% and 2.9% of the total public climate finance, respectively. Furthermore, adaptation funding remains critically low at 33%, while only 3% of the finance aims to enhance gender equality, despite the crisisβs disproportionate impact on women and girls.
This report highlights that current climate finance mechanisms, designed primarily as loans, undermine global development goals and directly conflict with climate justice principles, necessitating a fundamental policy shift toward grants and highly concessional financing ahead of COP30.
Follow the full report here: Climate Finance Shadow Report 2025: Analysing progress on climate finance under the Paris Agreement - World