Bangladesh requires approximately $146.81 billion as total climate finance until 2050, while the total adaptation finance needs will be $86.04 billion. On the other hand, $60.77 billion will be required to address the total mitigation needs (2021-2030), says a new report explaining Bangladesh’s climate finance requirements.
The report titled “Climate Finance Synthesis Report: Needs, Flows and Gaps in the HKH countries” was released by the International Centre for Integrated Mountain Development (ICIMOD).
The Hindu Kush Himalaya (HKH) region faces escalating climate risks, including glacial melt, biodiversity loss, and extreme weather events, posing severe threats to ecosystems, livelihoods, and the well-being of billions dependent on its resources.
Bangladesh has a substantial 59% funding gap, despite a high level of commitment, underscoring the significant need for increased disbursement rates, said the report seen by UNB.
Delivery on multilateral funding for adaptation and mitigation has fallen short, to less than 0.30% of the multilateral commitment.
Bangladesh received flows for energy, transport, and cross cutting sector 55%, 47%, and 61% respectively (with the gap of 45%, 39%, and 55%).
The bilateral has been better for Bangladesh in term of adaptation and mitigation, energy sector, transport, and cross cutting as it received 72%, 67%, 52% and 173% (with the average gap of 36%).
The fund flows on both cases (multilateral and bilateral) were channeled through a mix of instruments including ODA loans, ODA grants and non-export credits
This synthesis report by ICIMOD assessed climate finance needs, current financial flows, and gaps across HKH countries, highlighting significant funding shortfalls and uneven distribution.
The report estimated the HKH region requires approximately USD 12.065 trillion from 2020 to 2050 for climate mitigation and adaptation, amounting to an annual average of USD 768.68 billion.
China and India represent over 92.41% of these needs, while Nepal, Bhutan, Bangladesh, Afghanistan, Myanmar, and Pakistan face critical financing gaps relative to their GDPs, underscoring their heightened vulnerability (UNEP, 2023).
Globally, climate finance flows reached approximately USD 1.3 trillion annually in 2021/2022 (CPI, 2023), predominantly directed toward mitigation activities in developed and larger emerging economies.
In contrast, the HKH region receives significantly lower shares, with multilateral and bilateral climate finance frequently failing to meet committed levels.
Sectors crucial to the region, such as adaptation, agriculture, water management, and disaster risk reduction, remain significantly underfunded despite their critical importance.
Limited private sector engagement, insufficient institutional capacity, a fragmented policy landscape, and weak data infrastructure further compound these challenges.
To bridge these finance gaps, the report recommends enhancing regional and global advocacy for HKH-specific climate funding, strengthening national and regional climate finance strategies, improving policy coherence, and developing robust financial mechanisms and innovative market-based instruments.
Specific recommendations include: Building strong national institutional capacities and governance frameworks to manage and mobilize climate finance effectively; establishing an HKH Climate Finance Network to facilitate knowledge exchange, capacity building, and collaborative regional financing efforts; leveraging innovative financial instruments, such as green and blue bonds, debt-for-climate swaps, and voluntary carbon markets, tailored specifically for mountain economies; enhancing private sector engagement through improved enabling policies, incentives, and creation of bankable projects; improving data infrastructure, climate risk assessments, and reporting systems to attract investments and enhance accountability; urgent collective action and targeted financial investment in the HKH region are critical for building climate resilience, safeguarding ecosystems, and supporting sustainable development for current and future generations.
Recommendations for Bangladesh
Consolidate and Deepen Climate Budget and Reporting: Leverage further development on budget tagging, reporting, and transparency, e-tagging, audit-trailed MRV platforms, and integrated dashboards. Strengthen central mechanisms to pool domestic and external funds, standardize reporting, and tag budget ceilings and green procurement.
Mobilize Innovative Finance: Strengthen Bangladesh Climate Finance Facility to mobilise public, private, and international capital. Scale blended finance instruments, challenge funds, and thematic bonds to crowd in private investment.
Expand Private Investment: Provide concessional credit and incentives for industries to adopt low-carbon technologies. De-risk private investments in renewable energy, resilient agriculture, and coastal adaptation through public guarantees and risk-sharing mechanisms.
Harmonize Climate Finance: Operationalize the National Adaptation Investment Framework as the central coordination platform. Integrate carbon finance strategy to enable offsets and emission-reduction credits for garments, steel, energy, and other high-impact sectors.
Strengthen Climate Resilience: Channel resources to coastal and flood-prone regions, including embankment reinforcement, climate-resilient housing, salinity-resistant crops, and mangrove restoration. Develop carbon-linked agri-finance and insurance pools to protect farmers, households, and MSMEs.
Expand and Diversify Climate Finance Sources: Strengthen disaster risk reduction and local adaptive capacity by broadening instruments such as forecast-based financing, microinsurance, and community resilience grants.