LDCs are some of the most vulnerable to climate change. They are least able to recover from climate stresses and their economic growth is highly dependent on climate-sensitive sectors.

Climate change threatens to undo decades of progress towards reducing poverty and puts the SDGs achievements at risk. The urgency of the challenge is why it is time for the global financial architecture to seriously consider blended finance which consists in the strategic use of development finance for the mobilization of additional finance towards sustainable development in developing countries as an essential tool to deliver the necessary investment to support aggressive climate action. Development finance already represents the major source of international climate finance flowing to LDCs, yet current efforts to mobilize private capital for climate action in LDCs are far from being up to the task.

The latest OECD data show that while the volume of private finance for climate action in LDCs is increasing over time and accelerated in recent years, it still accounts for only 7% of all private finance mobilized. Of all private finance in LDCs, only 37% targeted climate action, amounting to $1.6 billion (on average in 2018-2019) which is far from being sufficient to the great needs of LDCs’ populations. The PSF is a chance for the private sector to demonstrate climate change financial solutions that will enable a just transition of LDCs’ economy to a net zero future by 2050.