Shafqat Choudhury, MA Governance, Development and Public Policy (class of 2025–26), joined the Institute of Development Studies after working in development finance. On World Environment Day, he argues that the gap between climate finance pledges and actual flows is not merely an accounting problem. It is, in fact, a structural failure that quietly suppresses climate ambition in the countries least responsible for the crisis.
Every few years, the world’s governments gather to negotiate climate finance. Numbers are announced. Commitments are made. Press releases circulate. And then, somewhere between meeting rooms and the project site, the money somehow fails to arrive. This dichotomy between what is pledged and what actually flows in is a central issue in international climate politics. It sits at the centre of whether the Paris Agreement, the 2015 global treaty committing nations to limit warming to 1.5 degree Celsius, can work at all. A closer look at how the Global South structure their climate plans makes this issue clear.
NDCs and the conditionality trap
National climate plans, formally known as Nationally Determined Contributions (NDCs), are the mechanism through which countries translate the Paris Agreement into action. Every country submits a document which sets out what it will do to reduce emissions and adapt to climate change. For most developing countries, these plans have two distinct tiers: the unconditional and the conditional commitments. The former is what the country will do using its own resources, regardless of external support. The latter is what the country could do if international climate finance arrives. The conditional tier is usually the more ambitious and larger portion of the plan.
This structure is a direct reflection of the bargain at the heart of the Paris Agreement. Developing countries would set ambitious climate targets, and developed countries would provide the finance to help them deliver. The problem is that the finance side of the bargain has consistently underperformed. When that happens, it is not just a broken promise in isolation. It directly suppresses climate action, and projects do not go into implementation despite institutional capacity to deliver them, simply because the financing has not come through.
Bangladesh and its NDC
In September 2025, Bangladesh submitted its NDC 3.0. The country is committed to reducing greenhouse gas emissions by 20.31 per cent from business-as-usual levels by 2035. That headline figure, however, conceals a significant internal split. A 6.39 per cent unconditional reduction, which the country will do on its own and another 13.92 per cent conditional reduction that depends entirely on receiving international support. The conditional ambition is more than double the unconditional one. To meet the full mitigation targets in NDC 3.0, Bangladesh needs USD 116 billion in total. Of that, USD 26 billion is for the unconditional component, to be financed domestically. The remaining USD 90 billion must come from international climate finance.
Bangladesh’s NDC documents the scale of this shortfall directly. Against an average annual demand of USD 9 billion to meet its conditional commitments, the country currently receives around USD 3 billion in total climate finance for mitigation, only 30 per cent of which comes from international sources. This implies an 89 per cent funding gap for NDC implementation. This is not a marginal shortfall, but a near-total absence of finance that the plan was built around.
Bangladesh has invested heavily in climate resilience using its own resources, including through one of the most comprehensive national climate adaptation strategies in the developing world. It is among the most climate-vulnerable countries on earth. The gap between what Bangladesh’s NDC promises and what it can deliver without finance is not a technical shortfall. It is a question of lives and livelihoods.
The adaptation picture is equally stark. Bangladesh’s annual adaptation finance needs stand at USD 8.5 billion, yet it receives only USD 0.4 billion per year from international sources, with 88 per cent of all adaptation finance coming from the government’s own budget. A country contributing less than 0.5 per cent of global emissions is effectively self-financing its own adaptation against a crisis it did not create.
The 2025 NDC cycle
The 2025 NDC submission cycle was supposed to be a moment of raised ambition. Countries had committed under the Paris Agreement to progressively strengthen their plans. The New Collective Quantified Goal (NCQG) was meant to give developing countries the confidence to do so. The COP29 outcome set a target of at least USD 300 billion per year for developing countries by 2035, within a broader aspiration of USD 1.3 trillion from all sources. However, the reaction from the Global South made clear that the deal was seen as deeply insufficient. India’s negotiator opined that the target was too little and too distant, while small island states described it as a fraction of what their countries urgently needed. Several developing country blocs staged a temporary walkout before reluctantly accepting the text.
The United Nations Conference for Trade and Development (UNCTAD) estimated that the NCQG should have been closer to USD 900 billion from 2025 itself, rising to USD 1.46 trillion by 2030. The United Nations Framework Convention on Climate Change (UNFCCC) Standing Committee on Finance had assessed the climate finance needs of just 98 developing countries at between USD 455 and USD 584 billion annually through 2030. The USD 300 billion target, even if delivered in full, would cover less than two-thirds of that floor estimate. Notably, it will not arrive for another decade.
What gets counted and what gets lost
The credibility problem in climate finance runs deeper than the headline numbers. Even when it is recorded as climate finance, it does not represent new and additional resources. The USD 100 billion agreed upon in 2009 was missed in 2020 and 2021 and only fulfilled in 2022. However, even then, it was plagued by definitional disputes. Concessional loans, export credits and development projects with marginal co-benefits were all reclassified as climate finance, stretching the boundaries of what the pledge was meant to define.
The majority of finance flows toward mitigation, namely renewable energy, clean transport and energy efficiency. These are important, but with countries already living with the daily consequences of a changing climate, adaptation is what matters most. At COP 26, the Annex II countries pledged to at least double adaptation finance from 2019 levels by 2025. The target has most certainly been missed, though, due to reporting lags, we might not know before 2027. Even if met, the United Nations Environment Programme (UNEP) estimates the adaptation finance gap runs between USD 187 and USD 359 billion per year; doubling it would have closed only 5 per cent of it. At COP 30, rather than taking accountability, there was an agreement to triple the goals by 2035.
For Bangladesh, the impact is real. Coastal embankments, early warning systems, drought-resilient agriculture and managed retreat from vulnerable zones all fall under adaptation, remain underfunded and difficult to access. The NCQG attempts to address this through more explicit reporting requirements, but structural barriers to access remain largely unaddressed.
When reciprocity fails
The Paris Agreement rested on the logic of reciprocity. The Global South agreed to set ambitious national targets on the understanding that the historic emitters would provide the financial support to deliver them. When that finance does not arrive, the conditionality is not unlocked, and the emissions that could have been avoided are not.
In January 2025, the United States formally withdrew from the Paris Agreement. Under the Biden administration, the country had reached USD 11 billion in international climate finance in 2024, a figure that is now under threat as the current administration has moved to dismantle climate finance commitments entirely. This is not just a financial gap. The reciprocity logic of the Paris Agreement was based on the premise that the world’s largest historical emitter would honour the commitment.
This World Environment Day, a pledge to cut emissions that depends on money which has not arrived is not an ambitious climate target. It is a conditional promise that the other side has not honoured. Making finance real, accessible and proportionate to requirements is not just a matter of international equity. It is the prerequisite for climate action of our time.
Shafqat Choudhury is currently pursuing an MA in Governance, Development and Public Policy at the Institute of Development Studies. For more information about this degree, please click below:
