Climate Finance Shadow Report 2025: Analysing Progress on Climate Finance Under the Paris Agreement
In 2024, the Horn of Africa endured a relentless cycle of drought and flooding, displacing millions of people and pushing tens of millions into food insecurity. In the Philippines, six consecutive tropical storms struck northern Luzon in just five weeks, affecting over 13 million people and devastating livelihoods. In Brazil, historic floods in Rio Grande do Sul displaced 600,000 people and caused billions in losses. UNICEF reports that 35 million children in Bangladesh faced disrupted schooling due to heatwaves, cyclones and floods in 2024 alone (UNICEF, 2025). The latest analysis from the UN Environment Programme paints a grim picture: we are on track for a catastrophic global warming of 3°C (UNEP, 2024a). The intensifying wildfires, droughts, storms and other climatic extremes that we are witnessing today are occurring at an average warming of just 1.3°C.
In this context, climate finance remains a key pillar in the multilateral climate change regime around the Paris Agreement (UNFCCC, 2025). Rooted in the obligation of developed countries to provide financial assistance to developing countries, climate finance is a lifeline for communities and countries on the frontlines of climate change, allowing them to address unavoidable losses and damages, adapt to the changing climate and advance low-carbon development.
The needs for international climate finance are vast and growing while current climate finance remains woefully inadequate. According to the Independent High-Level Expert Group on Climate Finance (IHLEG), developing countries (not including China) require around US$1 trillion a year by 2030 and
US$1.3 trillion a year by 2035 in external climate finance for mitigation, adaptation, and responding to loss and damage (Bhattacharya et al., 2024). These figures hugely exceed the goal that was set by developed countries in 2009 – and expanded in 2015 – to ramp up climate finance to reach US$100bn a year from 2020 to 2025.
The New Collective Quantified Goal (NCQG), adopted at the COP29 climate summit in Baku at the end of 2024, did not correct these shortfalls. It sets a target of reaching at least US$300bn a year by 2035 in international climate finance and calls on all actors to enable the scaling up of total finance to developing countries to at least US$1.3 trillion a year by 2035 (UNFCCC, 2025). While the latter figure seems to correspond to the volumes identified by the IHLEG, the needs in developing countries appear to be considerably higher; estimates of the required public, grant-equivalent finance alone are US$1–1.5 trillion a year (Sieber and Vernoit, 2024).
Developing countries’ entitlement to adequate climate finance is now also supported by the recent Advisory Opinion of the International Court of Justice (ICJ). It states that developed countries not only have an obligation in principle to provide financial assistance (as per the UNFCCC and the Paris Agreement) but that developed countries must carry out these obligations in a manner and at a level that allows for the fulfillment of Article 2 of the Paris Agreement (ICJ, 2025; Climate Home News, 2025).
So far, rich countries have been failing. Developed countries claim to have surpassed the US$100bn goal (reporting nearly US$116bn for 2022), two years later than originally promised. However, the true value of reported climate finance was just US$28–35bn in 2022, much less than what reported figures seem to suggest. By providing the majority of climate finance – almost 70%– in the form of loans, rich nations are unjustly indebting poor countries that have contributed the least to the climate crisis. Adaptation remains neglected in the allocation of funds, and developed countries largely continue to refuse to establish a solid foundation for drastically increasing climate finance for responding to loss and damage. Compounding this failure to fairly compensate developing countries, only a small share of climate finance is advancing gender equality while the continued diversion of official development assistance (ODA) from core development priorities to serve climate finance goals is further undermining the struggle of frontline communities.
The NCQG does not include actionable provisions to address many of these shortfalls, especially the negligence of adaptation in climate finance, the heavy reliance on loans over grants, and the lack of finance for addressing loss and damage. In this report, Oxfam and CARE present key findings from the most recent official climate finance reporting as contained in developed countries’ First Biennial Transparency Reports (BTR1s) and in the OECD’s climate-related development finance datasets for the years 2021 and 2022, offering recommendations to guide future climate finance under the NCQG. These recommendations stand in the context of the Baku-to-Belém Road- map that was launched at COP29 to further flesh out the NCQG’s provisions. This roadmap is an opportunity to rebuild trust, address the massive financing gap and the past shortfalls related to climate finance, ensure that rich countries finally own up to their responsibility, overcome the profound moral and legal failure to provide the necessary finance for climate action, and put the world on a safer path.
Climate Finance Shadow Report 2025: Analyzing Progress on Climate Finance Under the Paris Agreement
Full Report
© Oxfam International and CARE Climate Justice Center October 2025
This publication was written by Jan Kowalzig (Oxfam), John Nordbo (CARE), Rasmus Bo Sørensen, Tallulah Cherry-Virdee and Hans Peter Dejgaard (INKA Consult), as well as Nafkote Dabi (Oxfam). INKA Consult, an independent research consultancy with a special focus on climate finance, carried out the technical analysis underpinning this report. Oxfam and the CARE Climate Justice Center acknowledge the contributions of Alice Kooij, Chiara Liguori, Norman Martin Casas, Bertram Zagema, Josie Lee, Thomas Reeve and others in its production. The report has been copy edited by Lucy Cowie and designed by Enrique Spacca.
For further information on the issues raised in this publication please email advocacy@oxfaminternational.org or CJC-info@carenederland.org
This publication is copyright but the text may be used free of charge for the purposes of advocacy, campaigning, education, and research, provided that the source is acknowledged in full. The copyright holder requests that all such use be registered with them for impact assessment purposes. For copying in any other circumstances, or for re-use in other publications, or for translation or adaptation, permission must be secured and a fee may be charged. Email policyandpractice@oxfam.org.uk
The information in this publication is correct at the time of going to press.
Published by Oxfam GB for Oxfam International and CARE Climate Justice Center under DOI 10.21201/2025.00008. Oxfam GB, Oxfam House, John Smith Drive, Cowley, Oxford, OX4 2JY, UK.
OXFAM is an international confederation of 21 organizations, working with its partners and allies, reaching out to millions of people around the world. Together, we tackle inequalities to end poverty and injustice, now and in the long term – for an equal future. Please write to any of the agencies for further information or visit www.oxfam.org.
The CARE Climate Justice Center (CJC) leads and coordinates the integration of climate justice and resilience across CARE International’s development and humanitarian work. The CJC is an initiative powered by CARE Denmark, CARE France, CARE Germany, CARE Netherlands, and CARE International UK. To learn more, visit www.careclimatechange.org.