Abhishek Mittal, partner at Aavishkaar Capital, set the scene, stressing that the state of climate finance is marked by significant geographic and thematic imbalances. Globally, $2trn was deployed in climate finance in 2023 (most recent available data). However, less than 10% of this capital went into the Global South (India, Africa, Southeast Asia).

Uphill battles for finance to go into adaptation

Furthermore, Mittal highlighted that nearly 97% of capital is directed towards climate mitigation, leaving less than 3.5% for adaptation. “This substantial gap is exacerbated by the difficulty of Monitoring, Recording, and Verification (MRV) on the adaptation side.”

“The fundraising landscape for emerging first-time fund managers has been tightening a lot,” said Morgana Bourggraff, programme manager at Accelerating Impact, on 13 November 2025 during the Inclusive Finance 25 hosted by e-MFP. She argued that development finance institutions and private sector investors see climate and mitigation “as very financially viable.”

Making adaptation profitable

However, Bourggraff noted that the challenge in adaptation finance stems from the fact that it is fundamentally about “loss prevention, not profit.” A company invests in adaptation (like coastal integrity or water security) because climate change poses risks that threaten future losses. However, since these losses are not immediately tangible, she observed that there is no rationale for investors to put money into it if it doesn't hit their bottom line. “This is the reason why only about 3% of climate finance goes to adaptation.”

Even worse, less than 1% of adaptation finance currently reaches vulnerable communities. “How do we finance resilience for vulnerable populations that is profitable for investors? Not easy without putting that burden of profit onto the vulnerable via very high interest rates or high-cost products,” stated Bourggraff.

However, it is not all negative.  “There are nature-based solutions that have real revenues, such as tying tourism, which is profitable, to conservation, which is not profitable,” stated Bourggraff. She also thinks that the technology and innovation angles (food and agriculture tech like drought-resilient seeds) will be more commercially viable methods to invest in adaptation.

Maha Keramane from BNP Paribas explained that her bank helped in the setup of JuST Institute, an NGO involved in regenerative agriculture, to provide services and to create products for the most vulnerable “to help them adapt to what is coming.” Funding comes in the form of investment and technical assistance.

From greenwashing to greenhushing

The funding environment is undergoing a shift from "greenwashing" (exaggerating or fabricating claims) to "greenhushing," where organisations implementing genuinely sustainable measures choose not to disclose them publicly. “American and European banks are saying that they are still doing green things, but we're not going to talk about it,” said Howard Owen Miller, climate adaptation and resilience consultant at CGAP.  

“The worst offenders of greenhushing are impact financiers,” argued Bourggraff. She explained that impact funds resisted SFDR rules requiring disclosure of Principal Adverse Impacts (PAIs), feeling it contradicted their positive mission and citing data difficulties. Many opted for lower classifications (Article 8 or 6) instead of Article 9 to avoid PAI reporting. “For me, that was stage one of greenhushing.”

Some perceive greenhushing as merely a "marketing change" or a necessary correction after prior over-promising on climate returns. As long as the funding is still delivering climate impact, the name attached to the fund is less important.

Ongoing challenges of measurement

Unlike mitigation, adaptation is multi-dimensional and lacks a single, standard Key Performance Indicator (KPI). “It can be about the resilience of a house to floods or to heat,” stated Noémie Renier at Incofin Investment Management. She noted that defining specific KPIs can hardly work across different businesses. “I think that's a key barrier to getting more finance and investors into climate adaptation.”

On measuring and monitoring and reporting of projects, Keramane believes that we need to focus on “the most important direct, tangible, measurable and attributable impact” you want to shed light on. Some incentives such as lower interest rates or technical assistance are provided to increase the likelihood of successful impact.

Mittal noted that measurement tools often built for large corporations are impractical for SMEs, who lack dedicated staff. To address this, his firm developed a simple scoring tool focusing on around 100 questions, most with yes/no answers, to ensure practicality and ease of verification. “We want to see that over quarter-on-quarter, is there an improvement on that?”

Funding options

Renier thinks that blended finance is crucial for mobilising private capital in high-risk emerging markets, often using instruments like first loss capital and technical assistance to align risk perception with reality. Development institutions (e.g., KfW, Swiss Development Agency) use this approach to catalyse investment in new sectors, exemplified by the Nutrition Fund Facility, which supports African SMEs providing nutritious food locally instead of exporting it to Europe