Report on Climate Finance and Sustainable Development in Small States

Introduction: The Climate Crisis and its Threat to the Sustainable Development Goals

A roundtable discussion convened by the Commonwealth Secretariat and auctusESG during London Climate Week addressed the critical issue of climate-related loss and damage in small and vulnerable Commonwealth states. Financiers, diplomats, climate experts, and policymakers concluded that systemic change, rather than sympathy, is required to address the recurring climate shocks that threaten to derail progress towards the Sustainable Development Goals (SDGs).

For many nations in the Caribbean, the Pacific, and low-lying regions of Africa, climate disasters are a recurring reality, creating a state of perpetual recovery that directly undermines national development priorities and the achievement of the 2030 Agenda.

The Debt Cycle’s Impact on Core SDGs

The High Commissioner of Fiji to the United Kingdom, Jovilisi Vulailai Suveinakama, highlighted that rebuilding is no longer a temporary phase but a constant state of being. This creates a vicious cycle of debt, as governments are forced to borrow, often at high interest rates, to fund recovery efforts. This cycle diverts critical funding from essential public services, directly impeding progress on several SDGs:

• SDG 3 (Good Health and Well-being): Funds intended for healthcare are redirected to disaster recovery.
• SDG 4 (Quality Education): Budgets for education are siphoned off to address immediate climate-related damage.
• SDG 8 (Decent Work and Economic Growth): The continuous cycle of debt and rebuilding stifles long-term, sustainable economic growth.
• SDG 9 (Industry, Innovation and Infrastructure): Investment in new, resilient infrastructure is hampered by the constant need to repair and rebuild existing structures.

This challenge is a central focus of the Commonwealth Year of Resilient, Innovative and Sustainable Debt, which seeks solutions to this development crisis.

Expert Analysis on Climate Finance and Systemic Barriers

Participants identified significant gaps between the needs of vulnerable states and the current global financial response. The discussion underscored the need to move from dialogue to decisive action to support SDG 13 (Climate Action).

1. Dr. Ruth Kattumuri, Commonwealth Secretariat: Stressed the urgency of translating insights into “technical, analytical, policy and project frameworks” to achieve meaningful impact. She advocated for equitable access to financing to ensure countries can pursue sustainable and resilient development pathways.
2. Namita Vikas, auctusESG: Emphasized that the global financial architecture is not aligned with the scale or specificity of the climate challenge. She noted that “inadequate, predictable, and accessible climate finance is further compounded by complex eligibility criteria,” which leaves the most at-risk countries underfunded and unable to build resilience.
3. Dr. Thomas Munthali, Commonwealth Secretariat: Argued that conversations must evolve from risk assessments to implementing “real mechanisms that protect economies.” He highlighted the critical need to build member countries’ capacities for accessing finance and implementing climate-smart strategies to ensure a climate disaster does not derail a nation from meeting its long-term development goals.

Recommendations for Achieving SDG 17 (Partnerships for the Goals)

The roundtable’s clear message was that small and vulnerable states, which have contributed least to the climate crisis, should not bear its full cost. Achieving a sustainable future requires a renewed commitment to global partnership and systemic reform. Key recommendations include:

• Reform Global Financial Architecture: The current system must be redesigned to align with the principles of climate justice and the specific needs of vulnerable nations.
• Enhance Access to Finance: Eligibility criteria for climate finance must be simplified to ensure funding is adequate, predictable, and accessible for at-risk countries.
• Prioritise Capacity Building: International partners must support small states in developing the capacity to access funds and implement climate-resilient economic strategies.
• Strengthen Global Partnerships: Fulfilling the promise of SDG 17 is essential. The international community must collaborate to create systemic solutions that support those on the frontlines of the climate crisis.

Analysis of SDGs in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 13: Climate Action

  The article is centered on the theme of climate change, specifically its impact on small and vulnerable states. It discusses “climate-related loss,” “climate shocks,” and “climate chaos” as recurring issues, directly aligning with the core focus of SDG 13.

• SDG 17: Partnerships for the Goals

  The article emphasizes the need for systemic change in the global financial architecture to support vulnerable nations. It highlights issues of international finance, debt sustainability, and capacity-building, which are central to the financial and partnership targets of SDG 17.

• SDG 1: No Poverty

  The article describes how climate disasters push countries into a “never-ending cycle” of borrowing, which undermines development and perpetuates vulnerability. This directly relates to building the resilience of the poor and vulnerable to climate-related events, a key aspect of SDG 1.

• SDG 11: Sustainable Cities and Communities

  The constant need for “rebuilding” infrastructure after climate events, as mentioned by the High Commissioner of Fiji, and the call for initiatives to “increase resilience” connect directly to SDG 11’s focus on making human settlements resilient and reducing the economic losses caused by disasters.

• SDG 3 (Good Health and Well-being) & SDG 4 (Quality Education)

  These goals are mentioned as casualties of the climate crisis. The article explicitly states that the cycle of borrowing “siphons off funds meant for education, healthcare, and other development priorities,” indicating a direct negative impact on the ability of these states to achieve SDG 3 and SDG 4.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 13: Climate Action

   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries. The article’s entire premise is about helping small states “better prepare for climate shocks” and “increase resilience.”
   • Target 13.a: Implement the commitment undertaken by developed-country parties…to a goal of mobilizing jointly $100 billion annually…to address the needs of developing countries. The article directly addresses this by highlighting the “lack of adequate, predictable, and accessible climate finance.”
   • Target 13.b: Promote mechanisms for raising capacity for effective climate change-related planning and management in least developed countries and small island developing States. The article mentions the need to “build member countries’ capacities for accessing finance and implementing climate-smart economic strategies.”

2. SDG 17: Partnerships for the Goals

   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. The call to move beyond “risk assessments and toward real mechanisms that protect economies” and address “critical financing gaps” is a direct call for mobilizing these resources.
   • Target 17.4: Assist developing countries in attaining long-term debt sustainability. The article describes how governments must rebuild “usually by borrowing and often at high interest rates,” creating a “never-ending cycle” that undermines debt sustainability.

3. SDG 1: No Poverty

   • Target 1.5: By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events. The focus on “small and vulnerable states” facing “recurring reality” of “climate-related loss” directly aligns with this target.

4. SDG 11: Sustainable Cities and Communities

   • Target 11.5: By 2030, significantly reduce…the direct economic losses…caused by disasters…with a focus on protecting the poor and people in vulnerable situations. The article’s description of rebuilding as a “state of being” and the siphoning of funds for this purpose points directly to the economic losses from disasters.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• For Targets 1.5, 11.5, and 13.1 (Resilience and Disaster Loss):

  The article implies the need to measure the economic impact of climate events. An indicator is therefore:

  • Direct economic loss from disasters: Implied by the statement that after every climate event, “governments must rebuild,” and this process “siphons off funds” from other priorities. Measuring the cost of this rebuilding would be a direct indicator of loss.

• For Targets 13.a and 17.3 (Climate Finance):

  The article explicitly discusses the inadequacy of funding. An indicator is:

  • Amount of climate finance provided and mobilized: Implied by the critique of the “lack of adequate, predictable, and accessible climate finance” and the call to address “critical financing gaps.” Progress would be measured by the volume and accessibility of these funds.

• For Target 17.4 (Debt Sustainability):

  The article’s focus on the debt cycle implies a key financial indicator. An indicator is:

  • Debt service levels: Implied by the description of countries having to borrow “often at high interest rates” in a “never-ending cycle.” Tracking the proportion of national budgets spent on servicing this debt would measure the scale of the problem.

• For SDG 3 and SDG 4 (Impact on Social Spending):

  The article implies a trade-off between climate rebuilding and social services. An indicator is:

  • Government expenditure on essential services (education, healthcare): Implied by the statement that rebuilding funds are “siphoned off from education, healthcare, and other development priorities.” A decrease in the percentage of the budget allocated to these sectors following climate disasters would be a key indicator of this negative impact.

4. Summary Table of SDGs, Targets, and Indicators

Source: thecommonwealth.org