Climate financing is severely lacking, putting developing countries at a disadvantage when dealing with climate change. In response to this, there are calls to restructure the financial system.

Backdrop: Developing countries, which have contributed minimally to climate change, are most affected by its impacts and need funding to put up infrastructure and measures to adapt to the climate reality.
* A promise by wealthy nations to provide $100 billion annually to less wealthy nations, which has been unmet, is up for discussion in the upcoming COP28 hosted by the UAE.

Funding Reality: The funding shortfall has severe impacts on these lesser developed nations, with total climate funding being a fraction of what is needed.
* The latest assessment by the OECD found that developing countries received only $89.6 billion in 2021, still short of the $100 billion goal.
* Developing countries may need up to $2.4 trillion every year for climate investments between 2026 and 2030 according to the OECD.

Addressing the Financial System: Attention is being directed at global financial institutions such as the World Bank and International Monetary Fund.
* Proposals are underway to increase funding from these organizations and mobilize cheaper money to countries in need.
* The World Bank, partnering with various development banks, could increase lending capacity by up to $400 billion in the next decade, partly addressing the $1.8 trillion annual investment needed by 2030.

Debt Relief: Easing countries’ foreign debt could be a significant way of freeing up necessary climate investment funds.
* Around 50 countries are facing severe debt issues, potentially forestalling investments in areas like education, health care and climate action to repay overseas lenders.
* The World Bank recently announced a policy allowing certain countries to pause debt repayments in the event of a crisis or catastrophe.
* African leaders, including Kenyan President William Ruto, have called for a global deal for debt relief.
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