Klima-, Energi- og Forsyningsudvalget 2024-25
KEF Alm.del Bilag 421
Offentligt
3072230_0001.png
17. September 2025
II Whitepaper: Strategies to scale private
and blended climate finance for a just green
transition
The urgency for mobilising climate finance has never been greater. At COP29, participating nations set
ambitious goals for transferring climate finance from developed to developing countries. COP30 in Brazil will
be critical in transforming these commitments into actionable steps that align with the Paris Agreement
objectives. We have the pledges; now it is imperative to implement the right financial mechanisms to
facilitate the flow of climate finance.
The private sector plays a pivotal role in achieving these targets, yet substantial barriers to unlocking private
climate finance remain. During London Climate Action Week, a roundtable convened high-level stakeholders
to explore strategies for increasing private climate finance mobilization. This whitepaper synthesises insights
and recommendations from the roundtable, presenting strategies to effectively mobilise climate finance for
meaningful climate action and a just green transition.
It serves as a supplementary document to the previously published whitepaper private climate finance
released post Climate Week in New York last year:
I Whitepaper on private climate finance.
1. Define, integrate, and scale private and blended climate finance
To effectively measure private climate finance, establishing a clear definition is essential. It is imperative to
recognise that climate risk is inherently a financial risk, necessitating better integration of climate
considerations into mainstream financial decision-making rather than treating them as niche concerns.
Impact and good returns can be complementary rather than opposites, but this requires a shift towards
longer-term horizons and the liberty for institutions to explore strategic allocation of portions of their
portfolios.
Blended climate finance has so far not achieved the scale required, largely due to structural inadequacies,
complexity, lack of exit strategies, difficulties in securing catalytic capital, and challenges relating to
governance and transparency. It is crucial to rethink how blended finance mechanisms are structured and
deployed to attract private investment.
Case: Nordic collaboration at its best: IMCA
The Investment Mobilisation Collaboration Alliance (IMCA) is an example of a successful multistakeholder
initiative linking Nordic countries, development banks, and private investors through a central Secretariat
operated by the World Climate Foundation.
IMCA enables countries to pool public development funding to de-risk and attract private capital into
emerging and developing markets, demonstrating the power of collaborative finance and crowding-in. This
approach has already mobilised hundreds of millions of USD in private investment, directing capital to
underfunded regions and sectors. Since its launch at COP28 in 2023, IMCA has initiated three innovative
finance windows, with a fourth set to launch at COP30:
•
The BFET window supports climate mitigation in JET-P countries
•
The AFW focuses on climate adaptation
•
The GVCA promotes localisation and sustainability in Africa’s energy transition value chains
•
The new Adaptation Finance Window for Africa set to launch soon.
1
 KEF, Alm.del - 2024-25 - Bilag 421: Henvendelse af 25/9-25 fra DI om "Strategies to scale private and blended climate finance for a just green transition"
3072230_0002.png
17. September 2025
IMCA stands out as a model initiative that scales climate finance by coordinating donor funding, co-
developing blended finance windows, and facilitating dialogue between donors and private investors.
IMCA engages with diverse stakeholders in the development of its funding windows, from governments
and DFIs to asset managers and asset owners, fostering inclusive partnerships that reflect both
development priorities and investor expectations. In a shifting geopolitical landscape, IMCA demonstrates
how public-private partnerships in climate finance can act as a stabilising force, supporting economic
resilience and climate goals in vulnerable regions.
2. Embrace and engage diverse stakeholders
The current flow of private climate finance is insufficient to meet the burgeoning demand driven by rapid
temperature increases, extreme weather events, and other climate changes. To address this, it is essential
to broaden our approach and remain open to a diverse range of stakeholders, each contributing unique
resources, expertise, and knowledge that can enhance the mobilisation of private climate finance.
The public sector plays a crucial role in creating the framework that enables private investments in the green
transition. Political will and stable framework conditions are essential to ensure market credibility and long-
term investments. Public institutions can contribute by establishing an effective regulatory environment,
supported by clear targets, transparent processes, and robust energy infrastructures, such as grid expansion.
Strengthened public-private partnerships and close dialogue between policymakers and businesses are vital
to maintaining momentum in climate action and building trust in the long-term framework for the green
transition.
Additionally, other stakeholders play a crucial role. NGOs and local communities can act as the boots on the
ground, maintaining a focused overview of investment needs where private climate finance is most required.
Asset managers offer valuable insights into how investor needs can be better met through structured
pipelines, risk-aligned investments, and enhanced resilience in climate finance systems.
In addition to strengthen the social and equity dimensions of climate finance further, a dedicated Just
Transition Finance Window could be established to strategically link capital mobilisation with social
safeguards, job creation, re-skilling,
women’s economic empowerment, and community-level
resilience. This
initiative can provide significant value by offering investors clearer social KPIs alongside climate metrics,
thereby enhancing impact measurement. Furthermore, it opens up investable opportunities in labour-
intensive sectors such as renewable energy manufacturing, sustainable agriculture, and local infrastructure.
By channelling concessional or blended capital into funds that collaborate with municipal authorities,
cooperatives, and SMEs, it ensures local ownership and promotes sustainable community development.
3. Utilise private climate finance as a stabilising tool in a changing world
The tectonic plates are shifting in geopolitics, creating new risks and uncertainties. Private climate finance
can address these challenges by boosting economic development, reducing climate risks, and building bridges
between developed and developing countries. Climate finance is pivotal because its impact spans the entire
financial system, and thus, climate risk must be integrated into sovereign bonds, commodities, and asset
management.
However, the flow of private climate finance to developing countries remains hindered by regional
disparities, geopolitical tensions, and limited capital access. Investors face mandates demanding clear
justification for perceived risks. Therefore, it is essential to develop strategies that ensure risk-adjusted
returns, improve data quality, and enhance transparency and accountability. To further address these issues,
there is a need to innovate market models, redefine assets, explore new capital allocation strategies, and
leverage bottom-up approaches reflecting local needs. Improved credit ratings, cashflow projections, and
robust risk models will also be critical to catalysing the flow of private climate finance.
2
 KEF, Alm.del - 2024-25 - Bilag 421: Henvendelse af 25/9-25 fra DI om "Strategies to scale private and blended climate finance for a just green transition"
3072230_0003.png
17. September 2025
4. Carbon credits as a potential tool in mobilising private climate finance
Carbon credits may, under the right conditions, serve as one possible tool to mobilise private climate finance
and support cost-effective climate action across borders. They have the potential to enable climate projects,
often in developing countries, to be financed by stronger economies. They need, however, to be high-quality
international credits rooted in credible frameworks and clear rules to ensure transparency, measurable
impact, and to avoid risks of misuse. Further development of robust international standards and tools
–
for
instance under the UN framework
–
will be important for building trust among businesses and investors. Only
with strong governance and transparency can carbon credits play a supportive and trusted role in financing
climate solutions.
Co-Senders:
Anne Højer Simonsen, Senior Director and Head of Climate Policy at Danish Industry
Jens Nielsen, CEO at World Climate Foundation
Finn Mortensen, CEO at State of Green
Katherine Tubb, Managing Director at UK Business & Biodiversity Forum
Sneha Yadav, Head of ESG Investment at Astant Global Management
3