CDRI calls for radical climate finance reforms

The Climate Debt Risk Index 2024 (CDRI), introduced by Change Initiative (CI), calls for a complete overhaul of the global climate finance framework.

The report advocates for grant-based financing, 100% debt relief, and a nature-based economy as essential measures to combat escalating climate debt burdens.

The CDRI, based on an analysis of 20 vulnerable Least Developed Countries (LDCs), uncovers alarming trends that threaten equity, justice, and sustainable development in climate finance. Countries such as Mozambique, Madagascar, Myanmar, and Sri Lanka rank among the highest at risk, with Madagascar's Climate Debt Risk Index projected to reach 81.41 by 2030. The study reveals that total climate debt for the selected 20 LDCs peaked at $2.73 billion in 2014 and, despite fluctuations, remains significant. The overall climate debt burden has risen 24-fold, from $0.88 billion in 2009 to $21.25 billion in 2022.

Among LDCs categorised as "High Risk," Bangladesh and Malawi are experiencing rising Climate Debt Risk Index (CDRI) scores, signalling worsening fiscal vulnerability. Bangladesh faces a disproportionate per capita climate debt burden of $79.61, despite its heightened vulnerability to climate impacts. Its Climate Risk Index (CRI) score of 28.33 further emphasises the country's exposure to climate-induced challenges.

In addition, Nature Conservation Management (NACOM) presented insights into the country's disaster experiences over the last two decades. These findings were discussed during a COP29 side event jointly organised by CI and NACOM on November 14, 2024, in Baku, Azerbaijan.

Chief Executive of Change Initiative, M. Zakir Hossain Khan, during his keynote on the Climate Debt Risk Index 2024, emphasised transitioning from a greed-based economy to Nature-Based Prosperity. He stated, "The global financial system must be reformed towards natural rights-based equity and justice in climate finance mechanisms. Transitioning to 100% grant-based adaptation funding by 2025 will strengthen equitable climate resilience for the most affected communities. Accelerating debt cancellation through 'debt-for-climate swaps' will enable vulnerable nations to prioritise sustainable climate investments." He added, "Mobilizing $480 billion annually by 2030 is critical to aligning global climate finance with the Paris Agreement targets and securing climate resilience."

SM Munjurul Hannan Khan, Executive Director of NACOM, highlighted the devastating economic impact of natural disasters, stating, "Natural disasters have inflicted staggering damages—$1.7 billion during Cyclone Sidr (2007), $1 billion in 2022 floods and landslides, and $583.4 million from Cyclone Remal in 2024—crippling livelihoods in agriculture and fisheries."

Dr Madhav Karki, Chief Advisor for Forest, Environment, and Climate Change, Ministry of Forests and Environment, Nepal, called for prioritising climate justice and equity in global climate finance. He remarked, "Reforming the global financial system and uniting LDCs to claim their rightful share under the New Collective Quantified Goal (NCQG) is essential."

Dr Fazle Rabbi Sadek, Lead Negotiator of Climate Finance for Bangladesh, emphasised, "Unethical and unjust practices in climate finance accounting have undermined climate justice. LDCs deserve at least 12% of the carbon budget to ensure equity."

Dr Farhina Ahmed, Secretary, Ministry of Environment, Forest and Climate Change, Bangladesh, stated, "Bangladesh and LDCs have joined COP not to beg but to demand climate justice. A paradigm shift in the global climate regime is urgently needed. The CI offers strong scientific evidence of climate debt risks, which the Government of Bangladesh will leverage in future discussions on climate finance."

AKM Sohel, Additional Secretary, Economic Relations Division, Bangladesh, noted, "Despite OECD's claims of providing $100 billion annually under the Copenhagen Accord, only 15% of funds have been climate-specific, highlighting a glaring shortfall."

In 2017, M. Zakir Hossain Khan warned at COP23 about the looming risks of a climate debt trap for vulnerable nations—a warning now substantiated by the CDRI 2024. The analysis reveals a 24-fold increase in climate debt since 2009, with Bangladesh, Ethiopia, and Rwanda among the most affected in terms of per capita climate debt burdens. With the highest Loan-Grant Ratio (12.13), Sri Lanka exemplifies the heavy reliance on debt, while Afghanistan remains the sole recipient of grant-only climate financing.

The report also underscores that mitigation dominates funding allocation, sidelining essential adaptation efforts for the most vulnerable communities. Solutions such as carbon taxes, wealth taxes, and fossil fuel subsidy reforms are urgently needed to address these inequities and safeguard LDCs' futures.

The event featured a distinguished panel, including Prof. Mizan R. Khan, Research Fellow at Brown University; Prof. Abdur Rob Mollah, Chairman of NACOM; Paromita Aronee, Research Assistant at Change Initiative; and Tanjir Hossain, Global Resilience Advisor at ActionAid International. Salauddin Ahmed Reza, Senior Reporter at Jamuna TV, moderated the program.