Bridging Gaps, Facing Limits

Least Developed Countries (LDCs) and Small Island Developing States (SIDS) face the harshest impacts of climate change despite contributing least to its causes. With limited resources and high vulnerability, international climate finance is essential to drive action in these countries. Under the New Collective Quantified Goal (NCQG) and the Baku to Belém Roadmap, global ambitions call for mobilising up to US$1.3 trillion annually by 2035, with a growing emphasis on private finance. Yet, deep structural barriers – from small market sizes and high risks to limited fiscal space – pose a challenge for private investment in LDCs and SIDS. This CFAS Policy Brief critically examines these constraints and the ongoing debate over the role of enabling environments versus concessional finance, and identifies pathways to scale meaningful private climate finance that supports the world’s most vulnerable economies.