Decolonial climate finance in practice: assessing proposed reforms

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Introduction

The global financial architecture (which emerged during the Bretton Woods conference of 1944) is a legacy of a time when a few wealthy Global North countries ruled the Global South. It diminishes the ability of Global South countries to meet the development needs of their own populations and leaves these countries more vulnerable to climate impacts and with less bargaining power to influence global systems responsible for provisioning climate finance. Driven by a debt crisis in many lower-income countries, a post-Covid global economy and the need to rapidly mobilize additional climate finance given the escalating climate crisis, numerous structural reforms of the international finance architecture have been proposed by different actors and institutions. These proposed reforms differ in the principles underpinning the need for the reform and the extent to which geopolitical power imbalances between countries are being considered.

In this working paper, the authors develop a set of guiding questions for determining the extent to which international finance reforms are decolonial and tackle the deep imbalances of power between the Global North and Global South. They apply these questions to one such proposal, the Bridgetown Initiative. Throughout this paper they use the International Monetary Fund (IMF) classification of advanced economies as a proxy for the Global North, with all other countries being the Global South.

Key messages

• The funding and distribution of climate finance are predominantly controlled by the Global North and powerful entities less affected by climate change. Thus far, the existing climate finance mechanisms have been unsuccessful in raising sufficient funds and distributing the funds to those that need it the most.
• Calls for “decolonizing” climate finance are gaining traction in order to embed the Global South, Indigenous Peoples and marginalized communities in decision-making around climate finance, including: who contributes towards climate finance; the instruments used to distribute climate finance; who receives the funds; how it is accessed; and the projects and initiatives it goes towards.
• The Bridgetown Initiative proposes a set of reforms targeting the international financial architecture – particularly the World Bank, the IMF and multilateral development banks –to make them more fit-for-purpose through reducing the debt crisis in Global South countries and enabling them to better respond to the climate crisis.
• Despite being led by Global South priorities, the Bridgetown Initiative has been criticized for not including sufficient measures for debt cancellation or scaling up grants-based finance, placing too much emphasis on the private sector for providing climate finance and ignoring both the role of public climate funds and the need for climate finance to adhere to principles of historical responsibility.
• In addition to existing proposed reforms, measures such as debt cancellation, scaling up grants-based public finance, implementing tax and trade reforms, and channelling increased finance to the local level are needed to tackle the coloniality of the international financial architecture.

Suggested citation

Ghosh, E. Shawoo, Z. Nazareth, A. (2025). Decolonial climate finance in practice: assessing proposed reforms. SEI Working Paper.