Can the Private Sector Deliver on Adaptation? A New Report Says: Not Really

Everyone in climate world agrees that more finance is necessary to adapt developing countries to a warming planet. The challenge is scrounging up the requisite dollars, and knowing whose pockets to tap.

A new report out of the Zurich Climate Resilience Alliance (ZCRA) offers a fresh take — and it may not be one adaptation advocates want to hear. It warns that recent efforts to court the private sector may prove disappointing, as even under the most optimistic scenario commercial interests are only likely to deliver around 15% of adaptation needs by 2035 — up from just 3% today. Worse, some private finance could be a poison pill for poor countries, saddling them with payment obligations for decades that slowly erode their fiscal health.

And that’s not all. It further argues that popular ‘blended finance’ transactions — promoted by certain organizations as a way to use public money to scale private investment in adaptation — are pulling in much less commercial capital than hoped. Indeed, the ZCRA’s analysis suggests that as little as 51 cents of private money is being mobilized for every dollar of public funding. Put another way, it would take US$50bn of public money to unlock some US$26bn of private finance through current blended finance mechanisms.

Taken together, the findings threaten to undermine the case that private interests should be recruited to the adaptation finance cause, and could shake up the negotiating calculus of rich and poor nations alike going into the COP30 climate summit this November.

In particular, it could reframe discussions around the ‘Baku to Belém Roadmap’, an agreement struck at last year’s COP to find a way to scale climate finance to at least US$1.3trn a year by 2035.