Current adaptation finance flows to Africa are insufficient to meet growing adaptation needs on the continent. This report provides an overview of existing adaptation finance flows in Africa and identifies opportunities to increase the volume and efficacy of that finance.

The financial system lies at the heart of a sustainable future, particularly in the wake of the COVID-19 pandemic. Financial actors, including governments, central banks and financial supervisors, development finance institutions, commercial banks, asset owners, asset managers, and insurers, must work together to create a financial ecosystem that accurately prices risk and rewards sustainability, thus supporting the move towards a sustainable, net zero future.

Cities can play a key role in closing the global protection gap by acting as insurance consumers and funding risk reduction, as stewards of risk reduction and management through policy and planning, and as promoters of knowledge about risk and insurance provision within the urban ecosystem. Insurance plays a crucial role in transferring and mitigating risk, but the benefits of climate-risk insurance for cities go beyond increasing financial and fiscal resilience to climate-related risks.

Climate shocks are happening now—compounding risks and impacts alongside the fallout from the Covid-19 pandemic, especially for the most vulnerable. Building resilience to climate impacts will be critical to the efficacy of response and recovery efforts, yet climate-adaptation finance flows are at risk of falling sharply in the coming years at a moment when adaptation finance has never been more important.

The International Development Finance Club (IDFC) is the leading group of 26 national and regional development banks from all over the world, the majority of which are active in emerging markets. During the 2019 UN Climate Action Summit, IDFC affirmed a series of commitments to improve the quality of climate finance beyond increasing volume, including efforts to further align financial flows with the Paris Agreement and Sustainable Development Goals.

Members of the IDFC, 24 national, bilateral, and regional development finance institutions with more than USD 4 trillion in assets under management, can play a critical role in supporting the economic transformation of their countries of operation towards Paris alignment. Their close relationship with national and sub-national governments allow members to provide direct input and feedback on policy design and influence project pipelines.

The rapid growth of the Chinese green bond market demonstrates impressive ambition and demand for green financing in China. This report accounts for USD 120 billion cumulative green bond issuance in China, which amounts to a reduction of more than a 52.6 million tons of CO2e and at least 11.2 GW of installed clean energy capacity.

The impact of China’s banking system goes beyond China’s borders. Together the Big Four contributed USD 240 billion to the fossil fuel industry from 2016 to 2019. 44% of this contribution, or USD 106 billion, went towards coal mining and coal power, making the Big Four the top four financiers of coal globally.

China’s climate action in the coming decade will play a decisive role in whether the world can limit global warming to 1.5 degrees Celsius. As the world’s largest source of CO2 emissions, China accounts for nearly a third of the global total. Based on its current trajectory, China’s emissions are expected to increase further by 7%-15% by 2030 above 2015 levels, which would more than offset the global decreasing trend.