Risk to Reward 2025

How are they investing? In 2023, the composition of total public and private climate finance flowing to EMDEs remained predominantly debt-driven, with 65% issued as debt and 30% as equity. This balance shifts notably when isolating private finance, where debt accounted for 52% and equity rose to 47% (see Figure 5). This share of equity investments is largely driven by household purchases of low-carbon technologies. Regional variations further highlight divergent market dynamics: in the Middle East & North Africa (MENA), debt dominated at 67%; in Latin America & Caribbean, equity led at 52%; while Central Asia & Eastern Europe showed a near balance at 51% equity. These differences reflect varying levels of financing readiness and capital market development. Latin America’s equity share aligns with its maturing capital markets and expanding green finance ecosystems, whereas MENA region’s debt-heavy profile reflects investor caution, paired with a greater focus on large-scale renewable projects that require high levels of debt.23,24 This distribution illustrates how regional financial infrastructure and investor risk perceptions shape the instruments deployed in private climate finance. Private climate finance is concentrated in three regions Despite the global urgency of climate action, less than 30% of private climate finance in EMDEs reached regions outside Latin America, Central Asia and South Asia, leaving vast areas such as Sub- Saharan Africa, East Asia (excluding China) and Pacific, and the Middle East critically underfunded. This distribution mirrors broader patterns of capital market maturity, investor confidence and project pipeline readiness. Latin America’s leading position reflects a strong green bond market, established project pipeline and private sector participation in clean energy. Private climate finance to EMDEs, domestic and international, by instrument type (2023) FIGURE 5 49%51% 52.5%47% 48%52% 67%33% 53%46.4% 44%52% 24%10%66%0.4% 0.4% 4% Central Asia & Eastern EuropeEast Asia & PacificLatin America & CaribbeanMiddle East & North AfricaSouth Asia Sub-Saharan AfricaTransregional Total: $187 bn 52%$97 billionDEBT 47%$89 billionEQUITY 1%$1 billionGRANT Source: Climate Policy Initiative (CPI), 2025.22 From Risk to Reward: Unlocking Private Capital for Climate and Growth 11