Who is investing? Understanding who is investing, where capital is flowing and why certain sectors and geographies remain underfunded is critical to designing effective strategies that unlock the full potential of private finance. Just as important is recognizing the diversity within the private investor landscape, including commercial banks, asset managers, institutional investors, venture capital firms and impact funds. These actors operate with distinct investment mandates, risk appetites, return expectations and strategic priorities, shaped by their business models, fiduciary duties and regulatory environments. Why does this matter? Because without this nuanced understanding, climate finance strategies risk being misaligned with investor realities, failing to attract the right type of capital, at the right time, for the right projects. Many past initiatives have treated the private sector as a monolith, overlooking the specific barriers and incentives that influence different investor groups. This has contributed to both the insufficiency and inefficiency of climate finance in EMDEs. Building on reports by the Climate Policy Initiative (CPI), a US-based non-profit research group, which detail private climate capital providers worldwide, this section focuses on the breakdown of domestic and international investors providing private climate finance to EMDEs during 2023, summarized as follows (see Figure 4): –Commercial and investment banks led with 40%, primarily through syndicated loans and green bonds.15 –Corporates followed at 35%, driven by internal decarbonization and clean infrastructure investments. –Household and individuals contributed 23%, largely due to electric vehicles and distributed solar adoption, supported by national incentives.16 –Institutional investors accounted for just 1%, as most EMDE climate projects are too small or fragmented to meet their minimum ticket size requirements.17,18 They tend to invest in public equities, private equity, real estate and infrastructure rather than direct climate solutions, which are mostly implemented by corporates, commercial banks and households. –Philanthropies contributed 1%, deploying grants and catalytic capital to fund mission-aligned investments, often targeting early-stage and risk-tolerant opportunities.19 –Private equity and venture capital made up only 0.5%, constrained by limited pipelines, high perceived risk and insufficient risk-sharing tools – though they remain key for early-stage climate tech.20 This composition underscores a reliance on conventional channels and highlights the need to crowd-in private capital through better support for project preparation, regulatory clarity and blended finance mechanisms, as discussed in Chapter 2.When we talk about bankability, who decides what is bankable, whose balance sheet are we talking about? Kavita Sinha, Director, Department of Private Sector Facility, Green Climate Fund Private climate finance flows to EMDEs, by investor type (2023) FIGURE 4 40% 35% 23%1% 1% 0.5% Commercial and investment banks Corporates Household/Individuals Institutional investors Philanthropies Private equity and venture capital Source: Climate Policy Initiative (CPI), 2025.21 From Risk to Reward: Unlocking Private Capital for Climate and Growth 10

Risk to Reward 2025