ActionAid warns of private finance’s hidden dangers in climate talks

ActionAid has sounded the alarm on the role of private finance in climate change mitigation, calling it a “Trojan Horse” for exploitation.

The organization criticized the growing dependence on private sector investments to bridge the gap in global climate finance, arguing that it prioritizes profit over people and perpetuates inequality.

Speaking on the development, Global Lead on Climate Justice at ActionAide, Teresa Anderson warned that private finance is not a solution to the climate crisis but rather a means for financial actors in rich countries to increase their extraction, profits, and global leverage over the Global South.

“Rich countries often claim their “pockets are empty” and that private finance is needed to fill the gap in climate finance”, she noted.

However, ActionAid argued that the approach prioritizes profit over people and perpetuates inequality.

The organization urged developing nations to be cautious of mechanisms that may deepen inequality under the guise of climate aid.

The climate talks in Bonn are crucial in shaping the future of climate action, particularly in the lead-up to COP30 in Belém, Brazil. Negotiators will need to navigate complex issues like climate finance, adaptation, and mitigation, all while ensuring that the needs of vulnerable countries are taken into account.

Climate negotiations involve intricate discussions on rules, financing, and technical details that can significantly impact the effectiveness of climate action.

The Green Climate Fund, Global Environment Facility, and Loss and Damage Fund are critical components of climate finance, but their governance and disbursement criteria are subject to ongoing negotiations.