The impacts of these climate challenges are not inevitable. This report deals with the financing of two existing measures – climate change adaptation (CCA) and disaster risk reduction (DRR) – to better manage and reduce the risk of climate-related disasters and enable people to cope with multiple shocks and stresses.

In 2009, wealthy countries committed to mobilize $100 bn in annual climate finance to assist low-income countries to address climate change by 2020. To mark the deadline of this commitment, this report assesses the last decade of global official development assistance (ODA) invested in building people’s resilience to climate change. We ask two questions:

• Is the international community meeting the commitments it has made?
• Is funding for climate change adaptation and disaster risk reduction going to those people and countries that need it most?

The findings of our analysis were shocking and yet unsurprising; there is insufficient investment in preparing for the impacts of climate change and money is not going to the countries and people that need it most.

Insufficient investment. To date both climate change adaptation and disaster risk reduction have received insufficient financing. Within the $100 bn per year committed by the international community, a balance was supposed to be reached between funding for climate change mitigation and adaptation. This has not been delivered.

Global adaptation financing only reached $30 bn in 2017/2018; much less than the 50 per cent that would represent a balance. Even these figures may be an overestimation.

Leaving the most vulnerable behind. Using publicly available data to compare climate change adaptation and disaster risk reduction finance per capita of those living in extreme poverty and climate vulnerability (ND-GAIN index), we found that:

• Climate vulnerable countries are not receiving preferential targeting from donors.
• Only a quarter of bilateral financing and less than half of the major multilateral financing has targeted the most climate vulnerable countries with climate change adaptation funding from 2010–2017.
• There is no correlation between the amount of money received for climate change adaptation and disaster risk reduction by people living in extreme poverty and climate-vulnerability of a given country. This means funds are not being targeted according to need.
• The majority of the most climate vulnerable countries received less than $20 per person per year in climate change adaptation financing from 2010–2017.
• The average equivalent value of DRR financing per capita of the extreme poor (excluding outliers) was 66 cents per year over the period 2010–2018.

By 2030, climate change adaptation costs are expected to range between $140 bn and $300 bn a year, and rise to between $280 bn and $500 bn per year by 2050. For more severe scenarios of global warming these figures are expected to be much greater.

The longer adaptation and risk reduction efforts are put off by chronic underfunding in CCA and DRR, the more difficult and expensive it will be to manage adaptation needs and the harder it will be to save lives and mitigate suffering.

The gap in CCA and DRR financing must be closed if the global community is serious about protecting the future wellbeing of those people most at risk from climate change.
We risk leaving people behind if we do not better target funding according to need.

At this moment in time, at the forefront of governments’ minds will be response to and recovery from COVID-19. The benefits of building resilience to shocks has been made very clear in the COVID-19 pandemic. As governments work to protect their citizens and recover it is essential that climate change is addressed at the same time. This will require:

• Mainstreaming of DRR and CCA into COVID-19 response and recovery. All COVID-19 funding needs to be flexible, spent strategically, and work towards multi-hazard resilience.
• Recovery packages should endeavour to advance climate-smart, risk informed development and donors should screen funding for potential areas to ‘dual-purpose’ funding to build resilience to more than one risk. The World Bank’s Sustainability Checklist for Assessing Economic Recovery Interventions is a helpful start for policymakers.

While we recognise the current COVID-19 pandemic and the demand for financial resources it will require, it is essential that existing climate finance commitments are met.

Investing in climate change adaptation will build resilience to future crises – be they health or climate related. There is a ‘triple dividend’ of investing in resilience, which ensures scarce resources are creating the widest benefits including reducing disaster losses, unlocking development potential, and fostering wider social and environmental co-benefits. We therefore ask that:

• Wealthy countries make all efforts to meet the existing commitment of providing at least $50 bn in public finance for CCA by the end of 2020.
• Countries should use the existing opportunities under the UN climate change process to agree at the next UN climate conference (COP 26) to dramatically increase their climate ambition and set targets for the next five years that meet growing needs.
• This must include increasing financial pledges in countries’ Nationally Determined Contributions and increasing commitments to the Green Climate Fund (GCF) and other funds. Importantly, new sources of public financing for adaptation must be identified.

The costs of climate change are dramatically increasing, including loss and damage; irreversible impacts that go beyond the ability of communities to adapt. The longer the delay on allocating adequate investment to cover DRR and CCA needs, the greater the loss and damage costs will become. Loss and damage should be funded additionally without cutting or shifting funding from CCA or DRR.

• At COP 26 an adequate high level political commitment must be made to progress discussions on the establishment of the Santiago Network on how to address loss and damage, and identify new and additional funding that will complement existing humanitarian and development funding to collectively build resilience.

The solutions not only require more funding but also better targeting at the most climate-vulnerable countries according to poverty and need.

• At COP 26, within climate finance targets for the next five years, donors should commit to doubling the assistance provided to the most climate vulnerable Least Developed Countries (LDCs) by 2025. This would necessitate a re-examination of donor practices to add additional funding to countries neglected by existing climate and DRR finance. Where it is not possible to directly fund governments, civil society and local initiatives working on DRR and CCA can be supported.
• The Standing Committee on Finance (SCF) of the United Nations Framework Convention on Climate Change (UNFCCC) should report on how donor funds overlap with climate vulnerability of those most in need and present findings annually at COPs to increase attention and pressure on donors to meet their commitments and the intent of the Paris Agreement.
• Multilateral and bilateral donors need to take a long-term and holistic approach to fragile and vulnerable countries to support them with adaptation as this will simultaneously help other development goals. Consider developing ‘Adaptation Compacts’ with particularly climate vulnerable countries to prioritize building capacity. This should include long-term commitment and support for strengthening institutions at national and local levels to absorb and implement adaptation and DRR finance.
• Financing mechanisms need to be reformed to strengthen decision-making power of affected people, particularly marginalized groups. They should aim to strengthen local structures, processes, and institutions, working with civil society actors and existing networks.
• The commitments by bilateral and multilateral donors, including the Green Climate Fund, and by national governments should include detailed plans for increasing funding for local level authorities, organizations, and communities and how funds will reach the most vulnerable populations.

To understand the impact of funding and to ensure we use limited resources most effectively we must understand both the quantity and quality of climate change adaptation and disaster risk reduction funding. This report has highlighted the limitations of existing reporting mechanisms. Better tracking of adaptation and DRR financing is needed to gain a more accurate assessment of funding and impact.

• Reporting should include improvements in how donors track ‘mainstreaming’ of climate finance and the quality of such interventions.
• As of 2018 a new Organization for Economic Co-operation and Development (OECD)
  DRR policy marker was introduced; countries should immediately apply this rigorously in their reporting and continue to review the effectiveness of the policy marker over time.
• Within the UNFCCC process, parties (i.e. governments) must improve transparency, develop operational definitions, and improve the data reported. This should include clarification and international agreement on what is meant by ‘new and additional’ financing.