Global development summit seeks progress on climate finance despite Trump – Green Central Banking

UN Conference on Financing for Development Focuses on Sustainable Development Goals

Overview of the Fourth International Conference on Financing for Development

The Fourth International Conference on Financing for Development, held once every decade, convened in Seville, Spain from 30 June to 3 July 2025. This major UN-hosted event gathered governments, international organizations, civil society, and businesses to discuss strategies for funding development, climate action, and nature conservation, with a strong emphasis on achieving the Sustainable Development Goals (SDGs).

Challenges and Political Dynamics

• The United States reportedly sought to weaken the conference’s outcome by advocating the removal of references to climate action, gender equality, and sustainability from the final document.
• Progress depended on the ability of European countries, developing nations, and allied partners to resist these efforts and uphold commitments aligned with the SDGs.

Key Proposals in the Draft Outcome Document

The draft outcome document outlined several critical proposals aimed at supporting the SDGs, including:

1. Debt reform mechanisms to alleviate financial burdens on developing countries.
2. International taxation reforms to create fairer economic systems.
3. Calls for overhauling the global financial architecture to better support sustainable development.
4. Urgent actions to adapt to climate impacts and build resilience, improving access to climate finance.
5. Provision of new and additional financial resources and facilitation of technology transfer to address climate change.
6. Expansion of financial regulation and supervision to incorporate climate transition plans and climate stress testing.

Linking Debt Relief and Climate Finance

Experts and activists emphasized the importance of integrating debt relief with climate finance to accelerate progress toward the SDGs:

• Rebecca Thissen, global advocacy lead at CAN International, highlighted the need for a UN convention on sovereign debt to transform financial and economic systems.
• Approximately 70% of climate finance is currently provided through loans, which increase debt burdens on developing countries and hinder sustainable development efforts.
• The global financial system continues to benefit wealthy nations, which contributed most to the climate crisis, while demanding loan repayments from the least responsible countries.

Regional and Global Initiatives

• On the sidelines of the conference, Brazil planned to convene finance ministers to advance climate finance initiatives ahead of the COP30 summit, which it will host in November 2025.
• The COP29 summit in 2024 concluded with a controversial US$300 billion annual climate finance deal, falling short of the US$1.3 trillion experts deem necessary for effective climate action in developing economies.
• The COP29 agreement primarily relied on loans and private capital, lacking a guaranteed grant-based component, despite calls from global south negotiators to avoid increasing debt burdens.

Debt Restructuring as a Pathway to Sustainable Development

Advocates and researchers have long called for restructuring sovereign debt in the global south to enable countries to meet their climate commitments and SDGs:

1. A proposed workout mechanism could restructure approximately US$812 billion worth of sovereign debt.
2. In 2023, emerging and developing economies paid US$385 billion in debt service payments, limiting investments in green projects aligned with SDG 13 (Climate Action) and SDG 7 (Affordable and Clean Energy).
3. A Vatican-backed report, co-led by former Argentina Economy Minister Martín Guzmán, emphasized that the debt crisis is crowding out investments in health, education, and climate, undermining progress toward multiple SDGs.

Conclusion

The Fourth International Conference on Financing for Development represents a critical opportunity to advance the Sustainable Development Goals by reforming global financial systems, enhancing climate finance, and addressing sovereign debt challenges. The outcomes of this conference will significantly influence global efforts to achieve a green, inclusive, and sustainable future.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 1: No Poverty – The article discusses the crippling debt burden on developing countries and households, which impacts poverty levels.
2. SDG 5: Gender Equality – The US push to remove references to gender equality in the development finance discussions indicates its relevance.
3. SDG 10: Reduced Inequalities – Issues of unfair global economic rules and debt burdens on developing countries relate to reducing inequalities.
4. SDG 13: Climate Action – Central to the article is climate finance, adaptation, resilience, and the green transition.
5. SDG 16: Peace, Justice and Strong Institutions – Calls for a UN convention on sovereign debt and reform of the global financial architecture relate to strong institutions and governance.
6. SDG 17: Partnerships for the Goals – The conference itself is a platform for international cooperation involving governments, organizations, and civil society to finance development and climate goals.

2. Specific Targets Under Those SDGs Identified

1. SDG 1
   • Target 1.5: Build resilience of the poor and reduce their exposure to climate-related extreme events and economic shocks.
2. SDG 5
   • Target 5.5: Ensure women’s full participation and equal opportunities in leadership and decision-making in economic and public life.
3. SDG 10
   • Target 10.1: Achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.
   • Target 10.5: Improve regulation and monitoring of global financial markets and institutions.
4. SDG 13
   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters.
   • Target 13.a: Implement the commitment undertaken by developed-country parties to the UNFCCC to mobilize $100 billion annually by 2020 to address the needs of developing countries in climate finance.
5. SDG 16
   • Target 16.6: Develop effective, accountable and transparent institutions at all levels.
   • Target 16.7: Ensure responsive, inclusive, participatory and representative decision-making.
6. SDG 17
   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
   • Target 17.4: Assist developing countries in attaining long-term debt sustainability through coordinated policies.
   • Target 17.9: Enhance international support for implementing effective and targeted capacity-building in developing countries.

3. Indicators Mentioned or Implied to Measure Progress

1. Climate Finance Amounts – The article references the $300bn annual climate finance deal and the expert recommendation of $1.3tn by 2035, implying indicators measuring the volume of climate finance mobilized (related to SDG 13.a and 17.3).
2. Debt Service Payments – The $385bn paid by emerging and developing economies in debt service payments in 2023 is an indicator of debt burden impacting development finance (related to SDG 17.4).
3. Loan vs Grant Financing Proportion – The article highlights the predominance of loans over grants in climate finance, which can be an indicator of the quality and sustainability of finance (linked to SDG 17.3 and 17.4).
4. Access to Climate Finance – The draft outcome document’s focus on improving access to climate finance implies indicators measuring the proportion of developing countries receiving climate finance and the effectiveness of that finance.
5. Financial Regulation and Climate Stress Testing – The mention of expanding financial regulation and supervision to include climate transition plans suggests indicators related to the number of financial institutions implementing climate risk assessments.
6. Debt Relief and Restructuring Mechanisms – The call for a UN convention on sovereign debt and workout mechanisms implies indicators tracking the establishment and effectiveness of debt relief initiatives.

4. Table of SDGs, Targets and Indicators

Source: greencentralbanking.com