CPI Proposes Three Level Framework for Assessing Climate Finance Quality

Climate Policy Initiative has published a scoping study introducing a three-level framework — project, market, and system — for evaluating whether climate finance delivers sustained transformational change beyond individual transactions. The framework is designed to establish a common language across multiple public climate finance providers and inform the Baku-to-Belém Roadmap targeting USD 1.3 trillion in annual climate finance for emerging economies by 2035.

The study, titled Understanding the Quality of Climate Finance, identifies ten dimensions for assessing the transformational potential of public climate finance interventions. At the project level, inputs yield measurable outputs and outcomes aimed at keeping global temperature rise below 2°C. At the market level, the focus shifts to whether finance induces systemic demand and supply changes for climate solutions, with the IFC's Anticipated Impact Measurement and Monitoring framework cited as an existing approach. System-level quality addresses four dimensions — guiding paradigms, behaviours and attitudes, policies and regulations, and institutional arrangements — that shape whole economies.

CPI argues that a shared definition of climate finance quality among public actors could break assessments out of institution-specific siloes and allow aggregation of data points across portfolios. Currently, definitions vary: some actors equate quality with concessionality or ease of access, others with the volume of private finance mobilised, and others with direct climate outcomes. Without a common framework, strategic comparisons and optimal deployment decisions remain difficult for both providers and recipients of climate finance.

CPI's next steps involve applying the three-level framework to real-world sectoral data, such as adaptation finance or country-specific clean energy contexts, to refine the approach through iteration. The team also plans to support standardisation of climate finance quality indicators across multiple public climate finance providers. CPI's Climate Finance Tracking programme, which compiles the annual Global Landscape of Climate Finance, is positioned to anchor this standardisation effort and share learnings for the optimal use of public capital going forward.

Key figure — USD 1.3 trillion annual climate finance target for EMDEs by 2035