A record-high of US$125 billion of climate finance was done by multilateral development banks ( MDBs ) for climate mitigation and adaptation worldwide in 2023, according to a recent report.

This amount represents a 27% increase compared with that of 2022 ( US$99.7 billion ), finds the just published 2023 Joint Report on Multilateral Development Banks’ Climate Finance. And the amount was than double that of 2019, when MDBs announced their ambition to increase climate volumes over time at the United Nations Secretary-General’s Climate Action Summit.

Of the total US$125 billion in MDB climate finance, which refers to the financial resources committed by the MDBs to financing climate change mitigation and adaptation activities in the projects they undertake, US$74.7 billion went to low- and middle-income economies, and US$50.3 billion to high-income ones.

For low- and middle-income economies, 67% of the fund, or US$50 billion, went to climate change mitigation and 33%, or US$24.7 billion, to climate change adaptation; whereas, for high-income economies, 94%, or US$47.3 billion, went to climate change mitigation and the remaining 6%, or US$3 billion, to climate change adaptation. And most of these allocations went to energy, transport, building, public installation and end-use energy efficiency projects.

In addition to the MDB climate finance, climate co-finance, which refers to the volume of financial resources invested, alongside the MDBs, by other external parties, public or private, is also key to fulfilling the world’s net-zero climate ambition.

In 2023, a total of US$68.8 billion for climate co-finance was channelled to low- and middle-income economies, of which US$28.5 billion was mobilized from private sources. Likewise, the amount of climate co-finance in high-income countries stood at US$103 billion, of which 72.7 billion came from private sources.

Source: 2023 Joint Report on Multilateral Development Banks’ Climate Finance

Despite the record high amount of MDB climate finance and climate co-finance, the world still faces a formidable gap in its push towards net-zero emissions. To deliver on this goal, US$6.2 trillion of climate finance is required annually between now and 2030, according to a study by Climate Policy Initiative, and US$7.3 trillion by 2050 – a total of almost US$200 trillion.

At the upcoming United Nations Climate Change Conference ( COP 29 ), to be held in Baku, Azerbaijan, this November, one of the key deliverables is to increase global climate finance and reach agreement on a new collective, quantified goal on climate finance.