The world’s least developed countries (LDCs) are spending more on servicing external debt than they receive in climate finance, forcing them to bear the cost of the climate crisis through both damage to lives and livelihoods and mounting debt repayments, according to a report presented at the COP31 climate summit.
The report found that climate-vulnerable countries receive inadequate funding for adaptation, with much of the available finance coming as loans rather than grants. Nearly two-thirds of recorded adaptation finance commitments also have no corresponding payment records, raising questions about whether pledged funds are reaching recipient countries.
The findings were presented at a joint press conference organised by Change Initiative, Transparency International, Climate Action Network South Asia (CANSA)-Bangladesh and Young Power in Social Action (YPSA) in Antalya, Türkiye, on 10 November.
Presenting the findings, Change Initiative Co-founder and Chief Executive M Zakir Hossain Khan said 55 countries covered by the Climate and Disaster Risk Index (CDRI) spent $47.17 billion on debt servicing in 2023 alone. This exceeded the $33.74 billion in climate finance recorded for those countries over the entire 2002-2023 period.
The debt-servicing figure covers all categories of external debt, while the climate finance figure represents recorded climate-related financing.
Eight countries – Bangladesh, Cabo Verde, Cambodia, Myanmar, Pakistan, the Philippines, Senegal and Sri Lanka – accounted for 74.3 per cent of the climate loans recorded in the index. Each received more climate loans than grants.
The gap is also evident in adaptation funding. Although climate finance from developed countries rose from $115.9 billion in 2022 to $136.7 billion in 2024, only $2.3 billion of the $20.8 billion increase went towards adaptation. Two-thirds of public climate finance continued to come in the form of loans.
Of the $49.07 billion in recorded adaptation finance commitments, $32.43 billion, or 66.1 per cent, had no corresponding payment record, according to the report.
It also highlighted a shortfall in Bangladesh’s coastal protection. A World Bank-supported embankment project initially aimed to protect 100,800 hectares of land. The target was later reduced to 66,012 hectares, while actual protection covered 65,657 hectares, leaving 35,143 hectares outside the area originally promised protection.
Khan said four days of global military spending would equal a full year of public adaptation finance. Redirecting 40-50 per cent of public fossil fuel subsidies provided by G20 countries could generate the grants needed for climate adaptation, he argued.
The reliance on loans is also shaping Bangladesh’s renewable energy investment. Change Initiative Research Coordinator Mofazzal Hossain said 90.4 per cent of the country’s renewable energy investment since 2000 had come through loans, although Bangladesh contributes less than 0.5 per cent of global greenhouse gas emissions.
Of the $2.54 billion in climate finance directed to Bangladesh’s energy sector, $880 million financed coal and gas power plants, including projects in Matarbari and Bheramara.
At current financing terms, renewable energy-related debt could reach $105 per person by 2040, compared with the country’s current climate debt of around $80 per person across all sectors.
Change Initiative has proposed a Renewable Energy Sovereignty Facility, a national financing mechanism for LDCs based on grants, guarantees and capped public loans. The proposal aims to finance $7.69 billion in renewable energy investment during 2026-2030 while reducing new public debt from $4.6 billion to $800 million.
It would also limit renewable energy debt to $24 per person by 2040, a 77 per cent reduction from the projected level under current financing terms.
Speakers at the press conference called on COP31 to set an initial amount and annual targets for adaptation grants from 2027. They also urged countries to distinguish loans from grants in climate finance reporting and exclude fossil fuel projects from climate finance calculations.
Transparency International Secretariat Climate Lead Brice Böhmer warned that weak transparency and accountability in climate finance could create opportunities for corruption and undermine climate policies. He called for civil society and local communities to monitor whether climate investments address local priorities.
CANSA-Bangladesh President Mohammad Shahjahan said developed countries should provide new, additional, predictable and grant-based climate finance rather than count development assistance and loans as climate commitments.
Roaa, chief executive and founder of United Beyond Borders, called for greater accountability from developed countries for their historical emissions and more grant-based financing for projects benefiting local communities.
In his closing remarks, YPSA Chief Executive Mohammad Arifur Rahman urged journalists to investigate how climate financing arrangements increase the debt burden of vulnerable countries and affect ordinary citizens.
Khan said adaptation finance should not be left to private markets or profit motives. While the private sector had an important role in technology and manufacturing, he argued that renewable energy transitions should rely on transparent direct investment and sovereign financing frameworks rather than commercial debt.
