SDG 13: Climate Action | SDG 17: Partnerships for the Goals | SDG 8: Decent Work and Economic Growth
Institutions: Ministry of Finance | Ministry of Environment, Forest and Climate Change
The UNCTAD technical and statistical report, “All Roads Lead to Reform: A Financial System Fit to Mobilize $1.3 Trillion for Climate Finance,” released as an advance copy in Geneva, 2025, argues that reaching the aspirational target of US$ 1.3 trillion per year by 2035 for developing countries is impossible without comprehensive reform of the International Financial Architecture (IFA).
Report finds that climate finance delivery is currently underwhelming, primarily delivered as debt through a fragmented architecture that hinders access for the most vulnerable nations and inadequately finances adaptation or loss and damage. The report links climate failure directly to structural constraints in the IFA, identifying “disenablers” such as high costs of capital, limited fiscal space, unsustainable debt levels, and conditionalities. Without IFA reform, the Baku to Belém Roadmap to $1.3T risks repeating the failures of the $100 billion target.
The “Structural Constraints”
UNCTAD identifies three interconnected structural problems that prevent developing countries from financing climate resilience:
Financial Instability: Lack of fair and equitable access to the Global Financial Safety Net, exposing countries to boom-bust cycles and capital flow volatility.
Insufficient and Misaligned Finance: International public finance is often constrained, conditional, and tied to structural reforms, undermining policy autonomy for climate-resilient development.
Imbalanced Governance: Governance in International Financial Institutions (IFIs) remains heavily skewed toward developed economies, limiting developing countries’ voice in crucial decision-making and standard-setting.
Systemic Reform and Priority Gaps
The report maps existing reform proposals (like the Bridgetown Initiative 3.0 and the Nairobi Declaration) across three core areas for systemic transformation: Financial Stability, Finance for Long-Term Sustainable Growth, and Representative Governance.
Systemic Consensus: Consensus is emerging around the need to scale up public finance, rethink frameworks of conditionality that restrain action, and tackle debt distress.
Critical Gaps (Highlight): The report highlights a glaring omission: issues around volatile capital flows are mostly absent from the debate, despite their central role in past crises. There is little recognition of the right of developing countries to use macroprudential or regulatory measures to stabilize capital flows.
Framework for Action: To achieve a climate-aligned IFA, UNCTAD advocates for:
Implementing a GFSN that offers timely, unconditional support to all countries.
Vastly scaling up grant-based and concessional public finance.
Establishing a neutral, multilateral debt workout mechanism.
Reforming voting rights and decision-making processes to reflect all countries’ interests.
What is International Financial Architecture (IFA)? →The International Financial Architecture (IFA) is the global set of institutions, rules, norms, and practices that govern how financial resources, debt, and aid move across borders. It acts as the world’s operating system for money, determining who sets the standards and who gets access to finance. Key institutions within the IFA, such as the IMF and World Bank, provide emergency liquidity and long-term funding, but are widely criticized for concentrating decision-making power, reinforcing financial instability, and channeling funds like climate finance primarily as conditional debt. Therefore, reforms are urgently sought to transform the IFA to ensure access to stability tools is more equitable and unconditional, and that funding supports climate-resilient development rather than deepening debt cycles.
Follow the full report here: All Roads Lead to Reform: A Financial System Fit to Mobilize $1.3 Trillion for Climate Finance