As countries discuss a new goal on climate finance at the UN climate conference, COP29, we have an opportunity to boost the impact of every dollar we invest in climate action.
In climate finance, impact represents the measurable, positive outcomes achieved through climate action—determined by tracking specific metrics like emissions reductions, adaptation results, co-benefits, and the timeliness of fund disbursement. In a recent report on quality climate finance, we argue that we need better evidence to ensure every dollar of finance has better climate impact.
To measure impact well, we need measurable ways to track contributions to national climate plans (called Nationally Determined Contributions (NDCs), capture both immediate and long-term transformational change, enable learning for future interventions, and help identify scalable successful approaches.
The evidence gap
We have significant challenges in measuring impact effectively.
For one, there is a concerning lack of high-quality evidence on climate finance impact. The Global Development Center presented analyses demonstrating that climate adaptation, mitigation, and resilience are notably under-evaluated compared to other areas of development finance. This is illustrated by the fact that out of over 13,000 evaluations collected by the International Initiative for Impact Evaluation, only 87 focused on climate adaptation and 31 on climate mitigation.
Likewise, we see inconsistent metrics used, such as varying greenhouse gas accounting methods and a lack of transparency in reporting emissions reductions. Despite these challenges, measuring impact is essential for climate finance to achieve its intended goals and improve by learning from results.
Strategic Implications of the Evidence Gap
The evidence gap in climate finance creates a cascade of interconnected challenges that undermine global climate action. At its core, failing to evaluate and track data hampers evidence-based decision-making across the climate finance landscape. Funders and implementers struggle to identify which climate actions work best, where to prioritize limited resources, and how to optimize project design for maximum impact to get more out of every dollar invested. Without clear evidence of how to boost impact, we risk squandering the already limited climate finance resources.
These challenges could be a major roadblock to meeting the Paris Agreement goals. When we can’t pinpoint what works and what doesn’t, and keep repeating mistakes, we’re wasting a lot of potential. It’s hard to get more money when we can’t prove and track the value of our climate projects. This creates a vicious cycle that slows down climate action, especially for developing countries that need climate finance to meet their NDC targets.
The accountability deficit created by a limited understanding of impact poses perhaps the most serious long-term threat to climate finance effectiveness. Without strong ways to verify impact, stakeholders struggle to assess whether funds are being used effectively, leading to decreased transparency and eroding trust between donors and recipients. If we can’t show clear results and retain trust, it’ll be tough to grow investment in climate solutions, precisely when we need to scale up our efforts now.” This creates a compounding effect (Figure 1).
Addressing the Evidence Gap
Tackling the evidence gap requires a comprehensive approach that combines immediate practical actions with longer-term strategic initiatives.
In the near term, we need to:
- Standardize impact metrics and frameworks for measuring both direct and indirect benefits to provide a foundation for better evaluation. This must be coupled with real-time data collection and analysis systems that enable rapid learning and adjustment of interventions.
- Build institutional capacity to ensure that avoid creating new barriers to accessing finance. This involves not just investing in evaluation capabilities at all levels, but also providing targeted training and resources for impact assessment that can feed into enhancing projects under implementation. Institutions need access to appropriate tools and methodologies that can be adapted to different contexts, enabling them to conduct meaningful evaluations despite varying capacities and resources.
- Develop knowledge-sharing mechanisms to maximize the value of evaluation efforts. By creating platforms for sharing lessons learned and establishing communities of practice for evaluators, institutions can learn from each other’s experiences and keep their efforts distinct. This cross-project learning and comparison helps identify patterns of success and failure that can inform future intervention design.
In the medium-term strategy, we need to:
- Build deeper institutional analysis and development, examining current evaluation capabilities and identifying barriers to building robust evaluation systems. This includes analyzing the cost-effectiveness of different evaluation approaches and working to align institutional incentives with quality evaluation practices. In doing this, we must integrate local perspectives and traditional knowledge into evidence frameworks, ensuring that community-level impacts are adequately captured and measured as projects adapt and improve.
- Engage in systems-level analysis that examines the interconnections between climate and development outcomes. By developing cross-sectoral evaluation approaches and frameworks for measuring cumulative effects, we can better understand the full impact of climate finance interventions. This comprehensive understanding enables more effective portfolio-level learning and analysis, ultimately leading to better-informed decision-making across the climate finance landscape.
Bridging the Gap: From Evidence to Impact
The evidence gap is a clear hurdle in maximizing the power of climate finance to drive meaningful change. However, this challenge also presents an opportunity to revolutionize how we understand, measure, and amplify the impact of climate investments. By embracing comprehensive evaluation systems, strengthening institutional capabilities, and harnessing cutting-edge technologies, we can deploy climate finance effectively and accelerate progress toward our climate goals.
We need more than just technical fixes. We need to change how we think about evidence and learning in climate finance. Success will depend on sustained commitment from all stakeholders, strategic resource allocation for evaluation, and the development of evaluation frameworks that reflect diverse global contexts. Building this robust knowledge base isn’t just about accountability – it’s about catalyzing a new era of evidence-driven climate action that delivers measurable, lasting impact for communities worldwide.
As we face increasingly urgent climate challenges, closing the evidence gap becomes not just a technical necessity but a moral imperative. Only by understanding what works, where, and why can we ensure that every dollar of climate finance drives us closer to a resilient, sustainable future. The time for building this foundation is now – our climate goals depend on it.