Rich nations profit from the climate crisis as two-thirds of climate finance for the Global South is handed out as loans

The report finds that for every 5 dollars developing countries receive they are paying 7 dollars back. Globally, almost 70% of funding is delivered as loans rather than grants.

This is worsening debt burdens and hindering climate action. Compounding this failure, deep cuts to foreign aid, including from the UK’s budget, threaten to slash climate finance further, betraying the world’s poorest communities who are facing the brunt of escalating climate disasters.

Of the UK’s reported public climate finance total of $2172m in 2022, the report finds that $1258m of this was in the form of grants. The rest was given through tools like equity, insurance and guarantees, which — unlike grants — can add to the developing countries’ debt instead of directly giving them money.

Whilst the UK does not rank among the worst offenders for loans-based climate finance – unlike countries including France, Japan and Italy – it has still introduced creative accounting practices in calculating its public finance contributions, which over-inflate the real value of provided support. For example, the UK recently reclassified £1.7bn for humanitarian work and development activities to appear as contributing to its climate finance pledge.

All this comes in the context of the recent UK aid cuts, announced in February 2025, which saw the target of 0.7% of Gross National Income as Official Development Assistance (ODA) spending, slashed to 0.3%, the lowest level since 1999. This trend is echoed across rich countries, which are conducting the most vicious foreign aid cuts since the 1960s. Data by the OECD shows a 9% drop in 2024, with 2025 projections signalling a further 9 –17% cut.

This all threatens the achievement of the UK’s current climate finance commitment of £11.6bn by 2026, and the subsequent pledge which the government is due to announce shortly.

Beth John, Climate Justice Adviser at Oxfam GB, said: “Climate finance must not trap countries in debt - the UK's next climate pledge must make this clear.

“By protecting the quality of international climate finance, and setting an ambitious new target – including through mobilising new sources of finance, in line with the global climate finance target agreed at COP29 last year - the UK can lead by example and help drive a fairer, more effective global response to the climate crisis.”

Some key findings of the report:

• Rich countries claim to have mobilised $116 billion in climate finance 2022, but the true value is only around $28-35 billion, less than a third of the pledged amount.
• Nearly two thirds of climate finance was made as loans, often at standard rates of interest without concessions. As a result, climate finance is adding more each year to developing countries’ debt, which now stands at $3.3 trillion.
• Developed nations are profiting from these loans, with repayments outstripping disbursements. In 2022, developing countries received $62 billion in climate loans. We estimate these loans to lead to repayments of up to $88 billion, resulting in a 42% “profit” for creditors.
• Only 3% of finance is specifically aimed at enhancing gender equality, despite the climate crisis disproportionately impacting women and girls.
• Adaptation funding is also critically underfunded, receiving only 33% of climate finance as investors favour mitigation projects with more immediate financial returns.
• Developed countries continue to ignore the need for substantial loss and damage finance. At best, about 1% of total bilateral climate finance in 2022 may have been dedicated to loss and damage interventions.

As the impacts of fossil fuelled climate disasters intensify — displacing millions of people in the Horn of Africa, battering 13 million more in the Philippines, and flooding 600,000 people in Brazil in 2024 alone – communities in low-income countries are left with fewer resources to adapt to the rapidly changing climate.

“Rich countries are failing on climate finance and they have nothing like a plan to live up to their commitments to increase support. In fact, many wealthy countries are gutting aid, leaving the poorest to pay the price, sometimes with their lives,” said John Norbo, Senior Climate Advisor at CARE Denmark. “COP30 must deliver justice, not another round of empty promises.”

Ahead of COP30, Oxfam and CARE are calling on the UK to announce an ambitious new target for international climate finance, in line with the global finance goal agreed last year, and demonstrate how it will mobilise new sources of finance, including for adaptation and loss and damage.

Notes to Editors

Download the report.

Methodology note.

The CARE Climate Justice Center (CJC) leads and coordinates the integration of climate justice and resilience across CARE International’s development and humanitarian work. The CJC is an initiative powered by CARE Denmark, CARE France, CARE Germany, CARE Netherlands, and CARE International UK. To learn more, visit www.careclimatechange.org

Results of a global survey by Oxfam International and Greenpeace show 8 out of 10 people support paying for public services and climate action through taxing the super-rich. The research was conducted by first party data company Dynata in May-June 2025, in Brazil, Canada, France, Germany, Kenya, Italy, India, Mexico, the Philippines, South Africa, Spain, the UK and the US. The survey had approximately 1200 respondents per country, with a margin of error of +-2.83%. Together, these countries represent close to half the world’s population. See the results here.

Contact

Oxfam GB Media Unit at media.unit@oxfam.org.uk, 07748 761999