From Climate Finance to Sustainable Development: The Synergy of Financial Instruments and National Governance for Achieving <scp>SDG</scp> 13

ABSTRACT Climate change impacts are distributed unevenly worldwide, underscoring the critical role of climate finance in global climate governance. However, existing studies lack clarity regarding the targeted emission reduction pathways of climate finance and have not fully explored its synergistic interactions with national governance. Using a panel dataset of 171 countries (2013–2023) and a double machine learning (DML) approach, this study examines how international public climate finance influences greenhouse gas emissions (CO 2 , CH 4 , N 2 O) and its transmission mechanisms. We find that climate finance significantly reduces greenhouse gas emissions in recipient countries, primarily through increasing the share of renewable energy, improving energy efficiency, and enhancing forest carbon sinks. Moreover, the emission reduction effects are heterogeneous; loan‐based instruments outperform grants, and climate mitigation finance demonstrates a more substantial effect than climate adaptation finance. Finally, national governance capacity positively moderates the effectiveness of climate finance, with countries endowed with stronger governance realizing greater emission reductions from received funds. This study emphasizes that climate finance must align with recipient countries' governance capabilities. It recommends that international climate funds prioritize support for loan‐based and mitigation‐oriented projects, supplemented by capacity‐building initiatives, thereby providing scientific guidance for pathways to achieve the Paris Agreement's objectives.