COP31 moves the climate agenda from targets to implementation, and implementation will be decided by finance. Countries have costed their climate plans at around USD 3.6 trillion, yet LDCs, home to almost 20 per cent of the world’s population, received only 1.9 per cent of global climate finance in 2024. Plans and pipelines exist; the scarce resource is capital willing to take the first loss.
This paper sets out four issues COP31 cannot leave behind:
- making the New Collective Quantified Goal (NCQG) work for the last mile
- extending electrification to frontier markets
- channelling adaptation finance to local governments, small businesses and households
- turning inclusion into access to capital.
Under its Strategic Framework 2026–2029, UNCDF deploys risk-absorbing financial instruments, alongside investment structuring and advisory services, through three interconnected capabilities: MSME finance, subnational finance and digital finance. Because it does not borrow from markets and is not credit-rated, UNCDF can offer small tickets, lend in local currency, work with subnational counterparties and absorb first loss in early-stage and last-mile markets across LDCs, SIDS and fragile settings. By de-risking these investments, it crowds in public and private capital, building a pipeline that MDBs, DFIs and private investors can scale.
Over 2022–2025, UNCDF investments mobilized and catalysed close to USD 1 billion in public and private finance. UNCDF plans to deploy more than USD 2 billion in guarantees and other de-risking products over 2026–2029, and stands ready to serve as a financing and derisking partner to the Climate Implementation Bridge, alongside UNDP.
The paper calls on COP31 to make risk-absorbing capital a pillar of NCQG delivery and to channel it through national and local systems. With the right capital behind it, UNCDF can help ensure that no locality, however small, vulnerable or fragile, is excluded from the capital flows that resilience depends on.
