Southern-led multilateral channels for climate finance

Multilateral development banks (MDBs) led by Global South countries are starting to prioritise climate finance and have substantial potential to do more. Southern-led MDBs have deep local knowledge and strong relations with recipient governments but also face technical and financial obstacles to increase their climate investments. Targeted support from external development agencies, legacy MDBs and climate funds to Southern-led MDBs is a cost-effective way to maximise the impact of climate finance. Innovative instruments like sustainable bonds, equity investments, guarantees and hybrid capital can unlock more climate finance from Southern-led MDBs.