Baku to Belém Roadmap to 1.3T: AOSIS Finance Submission

MANDATE 

Decision X/CMA.6, Paragraph 7: [The CMA] decides to launch, under the guidance of the Presidencies of the sixth and seventh sessions of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement, in consultation with Parties, the “Baku to Belém Roadmap to 1.3T”, aiming at scaling up climate finance to developing country Parties to support low greenhouse gas emissions and climate-resilient development pathways and implement nationally determined contributions and national adaptation plans, including through grants, concessional and non-debt-creating instruments, and measures to create fiscal space, taking into account relevant multilateral initiatives as appropriate, and requests the Presidencies to produce a report summarizing the work as they conclude the work by the seventh session of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement

AOSIS welcomes the opportunity to provide input to the questions shared by the Presidencies of the sixth and seventh sessions of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement, on the ‘Baku to Belém Roadmap to 1.3T’.

Currently, climate finance remains inadequate, unpredictable, and largely inaccessible for small island developing States (SIDS), failing to meet the scale and urgency of our needs. The financial architecture, including for climate finance, is not fit-for-purpose, as it disproportionately relies on debt instruments and complex bureaucratic processes that hinder access to timely support.

The Baku to Belém Roadmap presents a critical opportunity to address these deficiencies and operationalize key provisions of the Paris Agreement, especially Article 9. It must serve as a concrete pathway to mobilize and deliver climate finance in a manner that is transparent, equitable, and tailored to the realities of vulnerable nations like SIDS. This Roadmap must not only facilitate immediate implementation of long-standing commitments but also drive systemic reforms that ensure finance is truly accessible and effective for the most climate-vulnerable communities.

1. What are your overall expectations for the “Baku to Belém Roadmap to 1.3T”?

From the perspective of SIDS, the Baku to Belém Roadmap must be a vehicle for the urgent and effective mobilization of climate finance in a manner that is predictable, accessible, and responsive to the unique vulnerabilities of our nations. While we acknowledge the mandate stemming from the New Collective Quantified Goal (NCQG) on climate finance decision in Baku, we cannot afford further delays in the provision of concessional climate finance. This Roadmap should:

• Ensure Immediate Implementation: The promises made in previous agreements must be translated into concrete financial flows without further delay.
• Prioritize SIDS and LDCs: The Roadmap must operationalize the specific calls made for public and grant-based resources, as well as highly concessional finance for adaptation and resilience-building as well as responses to loss and damage, in our countries.
• Hold Climate Finance Providers Accountable: The Roadmap must establish clear mechanisms for follow-through and accountability, ensuring that all finance providers— bilateral, regional, and multilateral—fulfill their commitments and their calls to action.
• Increase Public Financing and Concessionality: Climate finance should not further burden SIDS with debt; grants and concessional financing must be the primary form of climate finance.
• Align with International Financial Architecture Reforms: The current system disadvantages SIDS, and the Roadmap should work in tandem with ongoing reform efforts to ensure more favorable financing conditions for our countries.
• Promoting innovative financial mechanisms: The Roadmap must aim to reduce capital costs of mobilizing climate finance in SIDS. It should look at promoting innovative mechanisms to climate finance access, mobilisation and impact, including outlining the role of private capital.

2. Which topics and thematic issues should be explored to inform the Roadmap, within the scope of the mandate?

The Roadmap must focus on thematic areas that are critical for achieving the calls to action set out in the NCQG decision and ensuring fair and effective climate finance distribution:

• Access and Equity: Mechanisms to streamline and enhance access to climate finance for SIDS, including simplified application procedures and enhanced direct access modalities.
• Adequacy and Predictability: Ensuring that the quantum of finance is in line with evolving needs and that funds are disbursed predictably and transparently.
• Adaptation Finance: The Roadmap should demonstrate a pathway to drastically increase the provision of adaptation finance to the most vulnerable, in particular SIDS.
• Loss and Damage Response Finance: A substantial portion of the funding provided under the NCQG should be allocated to the operationalization and expansion of the Fund for Responding to Loss and Damage.
• Grants and Concessional Finance: The Roadmap should establish clear targets for grant-based finance and concessionality levels, particularly for adaptation and loss and damage response, especially for SIDS and LDCs.
• Debt Sustainability and Fiscal Space: Innovative financial instruments, such as debtfor-climate swaps, special drawing rights, blended finance, climate bonds, and first-loss and risk-sharing mechanisms, must be prioritized.
• International Financial Architecture Reform: The Roadmap should address systemic barriers within the global financial system that hinder SIDS’ access to finance, including high cost of capital, complex conditionalities and credit rating challenges.
• Transparency and Accountability: Robust mechanisms for tracking commitments, disbursements, and impacts of climate finance flows should be embedded within the Roadmap, including ensuring that any finance that expands fossil fuel production is not categorised as climate finance.

3. What country experiences, best practices, and lessons learned can be shared related to barriers and enabling environments; innovative sources of finance; grants, concessional and non-debt creating instruments, and measures to create fiscal space?

SIDS have faced multiple challenges in accessing climate finance, but we also offer important lessons and best practices:

• Barriers to Access: SIDS face excessive bureaucratic hurdles, arbitrary eligibility criteria and high transaction costs to access and manage climate finance.
• Best Practices in Non-Traditional Finance: Which could highlight successful SIDS stories on debt-for-climate swaps, blended finance interventions and climate bond issuance.
• Enabling Environments: Enhancing national financial governance, and strengthening regional finance mechanisms have proven effective in improving access. Having a common science-based taxonomy for sustainable activities provides clarity to investors who would like to channel capital to support the climate transition.
• Lessons Learned: 
• Climate finance must be structured to address the specific economic and structural realities of SIDS. oDirect access modalities, rather than other channels, ensure faster and more effective disbursement and greater impact.
• Climate finance should not exacerbate the debt burden of vulnerable countries. o Flexible financing increases implementation confidence across SIDS and improves predictability. 

4. Which multilateral initiatives do you see as most relevant to take into account in the Roadmap and why?

Several multilateral initiatives must be integrated into the Roadmap to ensure coherence and effectiveness, particularly in relation of paragraph 16 of the NCQG decision:

• The Fund for Responding to Loss and Damage (FRLD): This fund must receive substantial financing and establish clear minimum allocation floors for SIDS and LDCs.
• Green Climate Fund (GCF), Adaptation Fund (AF), and FRLD: These funds should see a tripling of their annual outflows, with special disbursement targets allocated for SIDS.
• Global Environment Facility’s Special Climate Change Fund (SCCF): This fund should prioritize SIDS-specific adaptation needs.
• Multilateral Development Banks (MDBs) Reform Initiatives: MDBs must drastically scale up concessional finance and enhance SIDS' access through innovative instruments, including the rechanneling of Special Drawing Rights (SDRs) through MDBs.
• G20 Common Framework for Debt Treatments: Expansion of this initiative to include comprehensive debt relief and restructuring for SIDS.
• UNFCCC’s Global Stocktake (GST) Process: The GST outcomes should guide the adequacy and predictability elements of the Roadmap.
• International Monetary Fund (IMF) Resilience & Sustainability Trust (RST)
• The UN Human Rights Council: Inclusion of the work, reports and outputs of the Council, its Independent Experts and Special Rapporteurs, as it pertains to issues of climate change, climate finance, fiscal reform and debt alleviation.

The Baku to Belém Roadmap must be a transformative and action-oriented tool, not just another plan on paper. For SIDS, it must guarantee enhanced access, increased concessionality, strengthened accountability, and alignment with broader financial system reforms. Above all, the Roadmap must translate promises into action, ensuring that the 1.3 trillion dollars in climate finance is delivered equitably, efficiently, and effectively.