Lab Summit Identifies Simplicity, Guarantees, and Local Capacity as Climate Finance Priorities

The Global Innovation Lab for Climate Finance convened over 100 climate finance practitioners at its 10th Anniversary Summit during New York Climate Week 2024 to identify strategies for accelerating investment in emerging markets. Key findings centred on avoiding overengineered financial structures, expanding guarantee instruments, building project pipelines in parallel with deal design, engaging local fund managers, and broadening partnerships to include insurers, pension funds, and corporates.

Lab participants cited financial complexity as a persistent barrier to investment, noting that overengineered structures rarely succeed in securing capital. The CoolPact Capital India Fund, which uses a standard blended venture capital structure familiar to development finance institutions, and Regenera Ventures Fund in Mexico, which leverages an established equity structure backed by USAID, were presented as models balancing innovation with investor familiarity. The Lab's Climate Finance Learning Hub is developing standardised playbooks to document successful financial mechanisms and guide replication. CPI's own landscape analysis identified 52 cross-border guarantee instruments supporting more than a quarter of all private climate finance globally.

Developing robust project pipelines emerged as a critical parallel workstream to financial structuring. Summit participants recommended a phased approach for harder-to-finance sectors such as adaptation, oceans, and nature-based solutions, starting with projects that have clearer revenue streams before expanding to higher-impact but more complex investments. South-South finance currently accounts for under 2% of total climate flows, and participants emphasised locally-led solutions as essential for building capacity, mitigating currency risk, and reversing South-to-North repayment cycles that have historically disadvantaged emerging markets.

The Lab's 2024 instrument class includes examples addressing each of the five summit themes. The Landbanking Nature Fund aims to mobilise corporate finance by developing Nature Equity Assets, while the Resilient Municipal Markets Fund targets local commercial banks in Africa through public-private partnerships to upgrade urban food markets. The InvestHer Climate Resilience Bond, led by the Grameen Foundation for a pilot in Uganda, illustrates the growing emphasis on local presence even when fund managers are headquartered internationally. These instruments will progress toward investor pitches at the Lab's annual Endorsement event.

Key figure — 52 cross-border guarantee instruments supporting over a quarter of private climate finance