Introduction

Adaptation lies at the heart of effective climate action, especially for the economies of the Global South. While global platforms like the Conference of Parties (COPs) and the UN Sustainable Development Goals (SDGs) recognize its importance, a pressing need remains to emphasize its significance continuously. This becomes even more critical in light of the tendency of financial institutions – such as Multilateral Financial Institutions (MFIs) and Development Financial Institutions (DFIs) – to prioritize mitigation projects, particularly those centered around energy transitions (Buchner et al. Reference Buchner, Falconer, Hervé-Mignucci, Trabacchi and Brinkman2011; Abadie et al. Reference Abadie, Galarraga and Rübbelke2013; Cao et al. Reference Cao, Alcayna, Cuevedo and Jarvie2021). As a result, adaptation financing often takes a backseat. This funding gap has stalled progress in adaptation planning and implementation globally, underscoring the urgent need for renewed focus and commitment. Striking a balance between mitigation and adaptation is essential to achieving holistic climate resilience.

The 2024 UNEP Adaptation Gap Report paints a sobering picture: the financial needs for climate adaptation in developing countries far outweigh the available funding from all sources, including governments, businesses, nongovernmental organizations, philanthropy, and multilateral and development financial institutions (UNEP 2024). The gap between what’s needed and what’s being provided is widening dramatically, with an estimated 10- to 18-fold difference. The adaptation funding the developing countries need is a hefty $215 billion annually for this decade alone (UNEP 2023). However, the financial injections required to actualize domestic adaptation blueprints soar even higher, demanding a formidable $387 billion yearly (UNEP 2023). Despite the urgent call to action, public multilateral and bilateral adaptation finance to the global south coffers witnessed a concerning 15 percent dip in 2021 (UNEP 2023).

However, since then, there has been a revival: global public adaptation finance to developing countries increased from $22 billion in 2021 to $28 billion in 2022, marking the highest-ever absolute and relative year-on-year increase since the Paris Agreement (UNEP 2024). Though prima facie this is a good development from the perspective of progress toward the Glasgow Climate Pact, which urged developed nations to at least double adaptation finance to developing countries from $19 billion (2019 levels) by 2025, it needs to be noted that achieving the Glasgow Climate Pact goal would only reduce the adaptation finance gap, which is estimated at $187–359 billion per year, by about 5 percent. This therefore requires a clarion call for renewed commitment toward adaptation financing with the renewed targets.

For the Global South, the adaptation needs are vast, but resources remain scarce. Though climate-related allocations under Official Development Assistance (ODA) have increased with 32.9 percent of allocable bilateral ODA supporting climate initiatives between 2021 and 2022, of all climate-related activities in 2021–2022, 34 percent addressed adaptation, 37 percent mitigation, and 29 percent both objectives (OECD 2024). Figure 11.1 shows Development Assistance Committee (DAC) members’ bilateral ODA to climate-related activities, which indicates that adaptation financing is increasing over time.

Figure 11.1

DAC members’ bilateral climate-related ODA (2013–2022).

Figure 11.1 Long description

The graph tracks three distinct categories, namely, mitigation only, both mitigation and adaptation, and adaptation only. The vertical axis represents the amount of funding in U S D billions, ranging from 0 to 20. The horizontal axis represents the years, starting from 2013 to 14 and extending to 2021 to 22. The line for mitigation only follows 12, 14, 13, 15, 14, 14, 17, and 18. The line for both mitigation and adaptation follows 4, 6, 7, 7, 8, 9, 10, and 14. The line for adaptation only follows 7, 5, 9, 10, 11, 10, 17, and 17. Note, all values are approximated.

Source: Prepared by the author based on OECD (2024).

However, the figure hides more than what it reveals. OECD (2024) provides a closer examination of the ODA data revealing that climate change was the primary objective for activities solely concentrated on mitigation in more than two-thirds of the cases by value. However, for activities centered on adaptation or those with dual objectives, climate change was the primary focus in less than 30 percent of the cases by value. In essence, mitigation activities were more frequently designed with climate change as the main goal, whereas adaptation was often treated as a secondary consideration within broader development cooperation efforts (OECD 2024).

On the other hand, Table 11.1 shows that as of December 2023, cumulative data on the pledges, deposits, and project approvals made by multilateral climate change funds show a clear bias against adaptation.

Certain definitions will help comprehend Table 11.1 better. Pledges are verbal or signed commitments from donors to provide financial support for a particular fund; Deposits or committed funds are the funds transferred from the donor into the fund account(s). The money officially approved and earmarked for a specific project or program is delineated as Approved in the table, while funds spent are represented by Disbursement. The bias in favor of mitigation projects against adaptation projects by the funding agencies is discernible from the fact that adaptation pledges are barely 40 percent of the mitigation pledges, while deposit proportions are even lower, as shown in the table.

While the generic picture reveals an anti-adaptation financing bias, it needs to be mentioned here that certain funds are making good strides in adaptation. The Green Climate Fund (GCF) has set a benchmark by dedicating 50 percent of its portfolio to adaptation projects, reflecting one of the more balanced approaches in climate finance. The Green Climate Fund (GCF) stands out as one of the few funding bodies with a significant share (~44 percent) of its portfolio dedicated to adaptation projects, highlighting a more balanced approach. However, GCF funding alone is not nearly enough to close the massive gap in adaptation finance. Their allocation remains insufficient in addressing the vast adaptation needs across developing regions (GCF 2024). In 2022, multilateral funds including the Adaptation Fund, the GCF, and the Global Environment Facility launched $559 million in new adaptation projects, a 10 percent increase from previous years (UNEP 2023). Yet, despite these gains, the annual funding required to support adaptation in developing countries dwarfs these efforts.

Hence, the question is: Where would the necessary funds come from? This creates an important entry point for the chapter. In its attempt to search for various options for financing, this chapter proposes a case for tapping into philanthropic finance to fund climate adaptation. At the very outset, it is important to understand the imperatives for climate adaptation, especially for the developing world. The second section of this chapter highlights the importance of adaptation financing. The third section talks about the various adaptation financing pathways. The fourth section creates a case for philanthropy toward climate adaptation finance. The fifth section takes up the case for India as a representative of the Global South and highlights the role it has played in climate finance, especially adaptation finance. The concluding section summarizes the chapter, highlights some important takeaways, and places some recommendations to enable philanthropic financing of adaptation.

The Imperatives for Adaptation Financing

The imperatives for adaptation financing are twofold: one rooted in epistemology and the other in ethics. The first, a “positive” imperative, is grounded in neoclassical economic theory and embedded in the concept of social cost of carbon (SCC). This concept offers an estimate of the cost of the damage with the emission of an additional ton of carbon. Therefore, SCC also mirrors the estimate of the benefit of an action that reduces a ton of carbon emissions. Mitigation projects like energy transition directly reduce atmospheric carbon, thereby reducing societal and economic costs that a unit of carbon emission would have imposed otherwise. On the other hand, adaptation projects, unlike mitigation projects, have no impact on carbon emissions mitigation; adaptation enhances the community’s resilience to climate change, thereby reducing the social costs of carbon. In other words, there are long-run impacts of not financing adaptation. These long-term social and environmental costs associated with climate change, such as increased risks to public health and safety, damage to infrastructure and property, and impacts on ecosystems and biodiversity, escalate the social cost of carbon. These costs, though significant, are frequently excluded from investment, production, or consumption decisions (Hambel et al. Reference Hambel, Kraft and Schwartz2021).

This leads to the second, “normative” imperative, which is ethical. The Global South historically has borne the brunt of the unsustainable consumption of the Global North. These regions require time for a just transition as many nations set their “net zero” targets. Meanwhile, the Global South must adapt to the adverse effects of climate change that disrupt lives and livelihoods. Building resilient communities in such circumstances is paramount, making adaptation a pressing necessity for the Global South (Ghosh Reference Ghosh2022, Reference Ghosh, Chakrabarty and Prabhu2024).

Neglecting investment in adaptation measures can have severe long-term cascading impacts across economies, societies, and ecosystems, exacerbating vulnerabilities and undermining development gains. While adaptation measures aim to build resilience against the adverse effects of climate change, such as rising temperatures, sea level rise, extreme weather events, and resource scarcity, adequate investment in adaptation magnifies these challenges.

Economically, the absence of adaptation aggravates infrastructure damage and agricultural losses and results in a decline in productivity and opportunity (Mukhopadhyay and Danda Reference Mukhopadhyay and Danda2022). For instance, recurrent floods and droughts can lead to billions in damages, disrupt global supply chains, and heighten risks for industries reliant on natural resources. Additionally, uninsured losses increase fiscal pressures, particularly in developing nations with limited capacities to absorb shocks.

Socially, lack of adaptation disproportionately affects vulnerable communities, exacerbating inequalities. Marginalized groups, particularly in the Global South, face displacement, loss of livelihoods, and food and water insecurity. Health systems become strained, as climate-induced diseases and heat-related illnesses increase without protective measures (Ghimire and Chhetri Reference Ghimire and Chhetri2022; Ghosh Reference Ghosh, Leeb, Wiesner and Lahner2024a).

Environmentally, the degradation of ecosystems intensifies. Without adaptation such strategies as restoring wetlands or improving water management, natural buffers against climate impacts erode, amplifying biodiversity loss and reducing ecosystem services essential for human well-being (Ghosh et al. Reference Ghosh, Danda, Bandyopadhyay and Hazra2016; Danda et al. Reference Danda, Ghosh, Bandyopadhyay and Hazra2019).

Furthermore, political stability can be threatened as competition over scarce resources, such as water or arable land, escalates. Ignoring adaptation not only risks immediate crises but also undermines long-term sustainability, creating a vicious cycle of vulnerability and fragility that hinders progress toward global goals like the SDGs (Ghosh and Ray Reference Ghosh and Ray2023).

The Indian Sundarbans Delta can be a case in point. The Delta in the eastern state of West Bengal, India, is shrinking due to sea level rise, leading to subsidence of land, agricultural land loss, and human habitat loss. The problem has been exacerbated by lack of soil formation and soil resuscitation caused by a diminishing supply of sediment from upstream as a result of the construction of the Farakka barrage that bifurcates the Ganges River and its distributary, Hooghly (Ghosh et al. Reference Ghosh, Danda, Bandyopadhyay and Hazra2016). In the process, there is a threat to the future survival of large parts of the delta ecosystem. Additionally, saltwater intrusion has significantly harmed agriculture. Although there is a reduction in the overall frequency of storms, depressions, cyclones, and surges, the proportion of high-intensity events is increasing, likely due to rising sea surface temperatures (Ghosh et al. Reference Ghosh, Danda, Bandyopadhyay and Hazra2016; Danda et al. Reference Danda, Ghosh, Bandyopadhyay and Hazra2019).

In this context, the importance of a managed and strategic retreat from climatically vulnerable areas and ecosystem regeneration in the Indian Sundarbans Delta has been highlighted by Danda et al (Reference Danda, Ghosh, Bandyopadhyay and Hazra2019). While studies indicate that managed and strategic retreat, combined with ecosystem regeneration in vacated spaces, is economically beneficial in the long term, implementation challenges and funding constraints remain significant barriers. Local politicians in particular may be hesitant to support such initiatives due to concerns that they do not yield immediate political gains within their tenure. Additionally, these projects can face community resistance and may even contribute to anti-incumbency sentiments during elections (Danda et al. Reference Danda, Sriskanthan, Ghosh, Bandyopadhyay and Hazra2011).

Although these views may appear short-sighted from a developmental perspective – particularly regarding life and livelihoods – they can be mitigated through the emergence of visionary local leadership. However, challenges related to securing adequate funding are likely to persist.

What Leads to the Chasm?

Several challenges need to be combated to bridge the adaptation financing gap. The first challenge is based on the return on investment (ROI) argument, as stated in the introduction. The long gestation periods and imperceptible short-term economic returns do not make adaptation financing worthwhile. Add to this, the “public goods” nature of adaptation projects often leads to non-excludability and non-rivalry in consumption, thereby creating problems in identifying beneficiaries for charging “user fees.” This, axiomatically, gets associated with a lack of the cost recovery mechanism, thereby deterring private-sector participation in the financing game.

The third challenge lies in identifying the appropriate sectors for financing adaptation efforts, largely due to a lack of understanding and empathy toward on-the-ground adaptation activities across society (Boyer et al. Reference Boyer, Meinzer and Bilich2016; Ghosh Reference Ghosh and Arora2024b). This is particularly evident in adaptation measures such as the “strategic retreat” of populations from climatically vulnerable regions, which is often misinterpreted as a “failure of adaptation.” As a result, such initiatives face low acceptance among local politicians and decision-makers, who perceive them as politically risky due to the potential loss of their vote bank (Danda et al. Reference Danda, Ghosh, Bandyopadhyay and Hazra2019).

The fourth challenge lies in differentiating between adaptation and development projects, which are often indistinguishable. Accommodative or adaptative infrastructure projects like the construction of bridges or embankments are often construed as development projects rather than adaptation projects. Regulatory and governmental policy interventions could help, but there is a notable absence of policy initiatives to incentivize or channel funds in this direction.

The fifth challenge is with the complexities associated with adaptation projects that often require a multidimensional “whole of society” approach. Unlike mitigation, which entails clear business cases in the form of straightforward measures like switching to renewable energy, adaptation projects require a substantially nuanced approach. For instance, a project like “strategic retreat” requires a holistic and deep understanding of community features, societal and cultural nuances, aspirations, counseling and reskilling, physical capital development, and job creation, and will be associated with extensive threat points that can include community backlash for inadequate rehabilitation (Ghosh et al. Reference Ghosh, Danda, Bandyopadhyay and Hazra2016; Danda et al. Reference Danda, Ghosh, Bandyopadhyay and Hazra2019).

Finally, a major hurdle in adaptation finance is the absence of a standardized definition of adaptation itself. Unlike mitigation, which is measured in emissions reductions, adaptation spans a wide range of initiatives – often with impacts that are hard to quantify. Without clear criteria, funders struggle to track progress, prioritize investments, or accurately assess needs. This ambiguity also leads to inconsistent reporting, making it harder to direct resources effectively or identify projects that genuinely build climate resilience. As a result, adaptation often takes a back seat to mitigation, where results are easier to measure and track (Ghosh Reference Ghosh, Leeb, Wiesner and Lahner2024a, 2024b).

Adaptation Financing Pathways

The paucity of adaptation financing in the Global South makes creating new adaptation financing pathways imperative. This has been emphasized by the G20 New Delhi Leaders’ Declaration (G20 India 2023) and the Think20 India Communique (Think20 India 2023 Secretariat 2023), both of which highlighted the important role the G20 needs to play in helping subnational governments in the Global South nations enable project development capacities. What is important now is that the Global South nations successively assuming the G20 presidency – Indonesia, India, Brazil, and South Africa – will need to prioritize the demand for adaptation finance, especially for the developing and the underdeveloped world. Some of the ways to do so are summarized here.

Making a Business Case of Adaptation. The first imperative is to attract private finance for adaptation. For that, a business case for adaptation needs to be made. From the government’s side, this will require institutional and fiscal incentives such as tax incentives for money invested in adaptation projects (Ghosh Reference Ghosh, Leeb, Wiesner and Lahner2024a). However, large businesses globally now acknowledge that projects that create public goods and result in a social rate of return can result in a win–win solution by helping conservation goals, furthering the cause of the SDGs, and creating positive outcomes for the value chain and the ecosystem players including the investors, communities, and the natural ecosystems (Ghosh Reference Ghosh and Arora2024b).

Adaptation financing, therefore, needs the lens of shared value creation as postulated by Porter and Kramer (Reference Porter and Kramer2011). This marks a unique space of intersection between the needs of the businesses and the broader social ecosystem in which the businesses operate and generates economic value for both entities. It helps businesses in corporate branding and creating a sustainable bottom-line framework. At the same time, for societies, the critical adaptation financing needs are met, which also helps the cause of the business.

Bolstering Blended Finance. Blended finance for adaptation is still a minor player in climate finance, leaving its vast possibilities largely unexplored. Private capital, integrated with public funding, should merge climate finance with disaster management funding while promoting nature-based solutions. Nature-based endeavors such as coastal ecosystem regeneration can effectively support both adaptation and mitigation efforts (Global Mangrove Alliance 2018).

The advantage of blended finance is that it enhances the risk–return profile of investments by combining capital with varied return expectations within a structured framework. The collaborations leverage public-sector expertise and private-sector efficiency and innovation, fostering investor confidence and scaling adaptation investments.

This approach mitigates uncertainties and knowledge gaps, thereby catalyzing private-sector involvement in funding initiatives that address climate adaptation. Public-sector guarantees and first-loss provisions can make adaptation investments safer and more appealing for private players. The Global Fund for Coral Reefs, for instance, used first-loss equity of $125 million from the GCF to attract threefold private investment, supporting coral reef protection and related economies (GCFR 2021).

Guarantees and co-financing mechanisms help attract private capital by mitigating investment risks. For example, the Multilateral Investment Guarantee Agency provided a $13.1 million guarantee in Jordan to protect private equity investments in water treatment infrastructure, addressing climate-induced challenges like storms and droughts (Choi et al. Reference Choi, Jang and Laxton2023).

Risk-absorbing capital can mobilize private investment in adaptation projects. Similarly, Lightsmith Climate Resilience, a private equity fund, leverages donor capital to create a junior risk-absorbing layer, enabling private investment in climate-resilient technologies, as evidenced by its $186 million fund closure in 2022 (Choi et al. Reference Choi, Jang and Laxton2023).

The need for and importance of blended finance for meeting adaptation financing needs cannot be overemphasized. Innovative instruments like resilience bonds and catastrophe swaps offer creative ways to link adaptation efforts with disaster risk financing. There is a need for institutional catalysts to bring about a change in thinking; multilateral development banks (MDBs) can fill that void by unlocking blended finance and structuring solutions that mobilize private capital for climate resilience.

Boosting South–South Cooperation towards Adaptation Financing. Cooperation among nations of the Global South can be an important source of adaptation financing. Due to common experiences and mutual respect, a southern economy, with wherewithal and money, understands the unique adaptation challenges of the developing and underdeveloped world better than any Global North–dominated institution (Bhowmick and Ghosh Reference Bhowmick, Ghosh, Kant and Saran2024). As highlighted by the successive G20 presidencies of the four global south nations from 2021 to 2025, South–South cooperation nurtures mutually beneficial alliances, enhancing the role of the least developed countries and small island developing states in global development governance. The United Nations Office for South-South Cooperation envisions these partnerships providing new development finance sources, including concessional loans and untied grants (Bhowmick and Ghosh Reference Bhowmick, Ghosh, Kant and Saran2024).

North-South Partnerships for Adaptation Financing. The dynamics of North–South partnerships need to change and should be built on equitable terms (Chakrabarty and Prabhu, Reference Chakrabarty and Prabhu2022). Development efforts must prioritize the needs and preferences of lower-income countries, necessitating reforms in institutions like the International Monetary Fund and World Bank, which are dominated by the Global North–led paradigm of development (Saleh et al. Reference Saleh, Danwanzam and Stephen2019; Hickel Reference Hickel2020). These institutions often focus disproportionately on mitigation projects, neglecting adaptation needs in the Global South (Murphy and Donaldson Reference Murphy and Donaldson2023). Trilateral partnerships, as suggested by Chakrabarty and Prabhu (Reference Chakrabarty and Prabhu2022), offer innovative solutions, particularly in the realm of adaptation financing.

Need for a Climate Adaptation Taxonomy Suited for the Global South. There is a clear dominance of taxonomies on climate change mitigation in the domain of climate financing, while adaptation-focused frameworks remain underdeveloped. The EU taxonomy is mitigation-centric and barely incorporates “do no significant harm” rules to prevent maladaptation. The UNDP and World Bank, despite offering promising principles, lag behind in providing adaptation taxonomies due to unique challenges (Korostikov Reference Korostikov2024). It needs to be understood that adaptation is inherently country specific, drawing less international investment compared to mitigation’s global impact. Moreover, its diverse needs resist universal criteria, unlike clear mitigation benchmarks, such as emission limits for energy. However, neglecting adaptation poses severe risks, from uninhabitable regions and mass migration to disrupted global businesses. Addressing these gaps is crucial for sustainable and inclusive climate resilience.

The adaptation needs are more for the Global South, especially the underdeveloped, climatically vulnerable regions, which may not have the wherewithal for immediate green transition. Their adaptation financing needs are therefore quite immediate. Given the adaptation financing gap as discussed earlier, current investment frameworks undervalue the adaptation needs. Again, adaptation projects often turn out to be a top–down approach, undervaluing local and indigenous knowledge in adaptation strategies (Pulido-Velazquez et al. Reference Pulido-Velazquez, Marcos-Garcia, Girard, Sanchis-Ibor, Martinez-Capel, García-Prats, Ortega-Reig, García-Mollá, Rinaudo and Kondrup2022).

This creates the case for a new taxonomy for adaptation highlighting the needs of the Global South (Korostikov Reference Korostikov2024). There is a need for the identification of adaptation projects (as distinct from development projects) in the taxonomy so that even fiscal incentives can be worked out to attract adaptation financing. Better definition and classification of adaptation projects could help prevent “adaptation-washing” while ensuring genuine adaptation projects receive appropriate funding.

A G20 Development Financial Institution. Ghosh et al. (Reference Ghosh, Chakrabarty and Prabhu2024) propose a development financial institution (DFI) at the G20 level to address some of the critical gaps in development financing including the adaptation financing gap, given the failure of existing institutions to cater to those needs. Such an institution can support the nations of the Global South for their SDG funding needs and revitalize the global economy during times of crisis. The G20 DFI will consider long-term social returns rather than short-term economic returns – the typical characteristics of adaptation projects. Similarly, a G20 DFI can mobilize resources for financing loss and damage (L&D), the setting up of which has been a highlight of COP27 to support the vulnerable communities of the Global South. As such, L&D financing is about financing permanent loss and damage to the Global South communities by the Global North economies and is, as such, a compensatory payment.

The response so far has been lukewarm, as there is no return associated with such payment (Ghosh and Kumar Reference Ghosh and Kumar2025). With the G20 being the platform combining the Global North and South economies, the G20 DFI might be the ideal platform to mobilize such funding from various sources including national economies, philanthropies, and others. The big problem of valuation of L&D and the right formula that needs to be arrived at should be addressed by an institution that combines the attributes of Global North and South economies, and not by institutions dominated by the Global North interests (Ghosh et al. Reference Ghosh, Chakrabarty and Prabhu2024).

The Role of Corporate Social Responsibility. Many governments of the Global South earmark a percentage of the profit for corporate social responsibility (CSR) purposes. For instance, in India, businesses are required to allocate at least 2 percent of their average net profits from the past three years to CSR activities. To align this spending with development and adaptation priorities, governments could mandate that 35 percent to 50 percent of total CSR expenditures be directed toward achieving SDGs. Within this SDG-focused CSR allocation, 25 percent could be designated specifically for adaptation financing. Such a measure would ensure dedicated funding for adaptation efforts, significantly enhancing financial resources for these critical purposes.

Innovative Financial Instruments. While a large number of financial instruments have been used for the mobilization of adaptation funds (IISD and NAP Global Network 2023), the need for innovation does not halt there. In many contexts, green bonds, sustainability bonds, sustainability-linked bonds, blue bonds, social bonds, and the like have been used to enable access to resources from financial institutions, private investors, institutional investors, impact investors, businesses, and other philanthropists, creating the opportunity to be blended with traditional sources of financing. Several other types of innovation – water credits, weather derivatives, and water index futures, to name just a few – have also taken place in the United States, Chile, and Australia to help the farm community adapt to the water availability risk (Ghosh Reference Ghosh2022, Reference Ghosh2024c). Such models need to be improvised for adoption in the Global South.

While various financing options are available, await further boosting, or are being innovated and should be used in conjunction with one another, philanthropy must work hand in hand with them. Given the massive adaptation financing chasm that exists, one or a combination of the existing ones may not be sufficient. The capacity of philanthropy to narrow this yawning gap hardly seems to have been acknowledged.

The Case for Philanthropy toward Climate Adaptation Finance

Why Philanthropy?

Philanthropy is delineated as “private initiatives for the public good, focusing on quality of life” (McCully Reference McCully2008: 13). Since philanthropy differs from business creating private value or private good through its initiatives, and is rather concerned with the creation of “public goods,” there is never an expectation of material ROI or the pure economic rate of return based on monetary metrics for private gains. With altruism being the prime motive, philanthropy is an ideal option for undertaking initiatives and funding for public good creation that are non-excludable and non-rival in consumption (perfect public goods), such as public infrastructure, public education, and public health, among others (Oakland Reference Oakland1987). With public finance often turning out to be insufficient, and profit-focused private finance abstaining from funding such initiatives, there is a financing vacuum for projects such as poverty alleviation schemes or food rationing projects. Philanthropy has often been forthcoming in bridging this gap.

In previous sections, it has already been argued that climate adaptation finance has largely been elusive due to its “public goods” nature, and therefore not catering to the criterion of ROI. However, there is a high social rate of return on these projects. The Global Commission on Adaptation (2019) suggests that a global investment of $1.8 trillion in merely five areas, namely early warning systems, climate-resilient infrastructure, dryland agriculture, mangrove protection, and resilient water resource management, could generate $7.1 trillion in total net benefits in a decade. In other words, failing to seize the economic benefits of climate adaptation with high-return investments would undermine trillions of dollars in potential growth and prosperity.

Philanthropy has a vital role to play in addressing the climate finance gap, yet it remains heavily skewed toward mitigation over adaptation. In 2022, it was found that companies gave a median amount of $637,500 specifically for climate change mitigation, largely channeling funds into research, advocacy, and actions to reduce emissions. In contrast, there were no similar commitments recorded for adaptation, underscoring the disparity in philanthropic support between these two crucial areas.

The broader landscape of philanthropic giving mirrors this imbalance. ClimateWorks Funding Trends Report reveals that in 2021, philanthropic contributions to mitigation from foundations and individuals ranged from $7.5 billion to $12.5 billion – a marked increase from previous years. Mitigation funding has been growing by about 25 percent annually, yet it still comprises less than 2 percent of global philanthropic giving. Adaptation finance, however, remains significantly underrepresented, without an equivalent surge in philanthropic support (Desanlis et al. Reference Desanlis, Matsumae, Roeyer and Yazaki2021).

Philanthropic funding also shows sector-specific priorities, with clean electricity, forests, and food and agriculture as the top recipients. In 2021, clean electricity received $300 million (11 percent of total funding), forests received $260 million (9 percent), and food and agriculture garnered $240 million (9 percent). Despite a rising corporate focus on climate and nature themes – evident in the $607 million donated to these areas in 2022, up 127 percent from 2018 – the emphasis remains on mitigation, while adaptation lags behind (Figures 11.2–11.5). Major economies like the United States, Europe, and China contributed around 70 percent of corporate philanthropic funding recently, reflecting a growing interest from these regions in climate action (Desanlis Reference Desanlis, Lau, Janik, Suttenberg and Menon2022).

Figure 11.2

Average annual cross-sectoral funding by region (in $ billion).

Figure 11.2 Long description

The vertical axis ranges from 0 to 160. The horizontal axis represents regions, namely, Africa, Asia and Oceania, Brazil, China, Europe, Global, India, Indonesia, Latin America, Other or unknown, and U S and Canada. The graph plots bars for Carbon dioxide removal, cities, super pollutants, other climate mitigation strategies, and total. The values are 5, 0, 0, 2, and 7 for Africa. 0, 0, 0, 2, and 2 for Asia and Oceania. 0, 2, 0, 0, and 3 for Brazil. 2, 8, 2, 8, and 19 for China. 23, 12, 2, 37, and 70 for Europe. 30, 30, 20, 70, and 150 for global. 3, 2, 0, 5, and 14 for India. 0, 2, 0, 0, and 4 for Indonesia. 2, 3, 0, 0, and 4 for Latin America. 2, 0, 0, 6, and 8 for other or unknown. 22, 37, 8, 60, and 124 for U S and Canada, respectively. Note, all values are approximated.

Source: Prepared by the author by estimating from the data presented by Desanlis (2022).

Figure 11.3

Average annual funding for enabling environment by region (in $ billion).

Figure 11.3 Long description

The vertical axis ranges from 0 to 250. The horizontal axis represents regions, namely, Africa, Asia and Oceania, Brazil, China, Europe, Global, India, Indonesia, Latin America, Other or unknown, and U S and Canada. The graph plots bars for core and capacity building, governance, public engagement, sustainable finance, and total. The values are 0, 3, 0, 5, and 5 for Africa. 3, 3, 3, 2, and 5 for Asia and Oceania. 3, 3, 3, 3, and 5 for Brazil. 10, 15, 5, 15, and 45 for China. 5, 25, 25, 10, and 70 for Europe. 20, 40, 40, 55, and 155 for global. 4, 4, 3, 5, and 7 for India. 0, 0, 0, 0, and 0 for Indonesia. 0, 0, 0, 3, and 3 for Latin America. 0, 0, 0, 3, and 3 for other or unknown. 22, 53, 140, 15, and 230 for U S and Canada, respectively. Note, all values are approximated.

Source: Prepared by the author by estimating from the data presented by Desanlis (2022).

Figure 11.4

Average annual funding for land use by region (in $ billion).

Figure 11.4 Long description

The vertical axis ranges from 0 to 250. The horizontal axis represents regions, namely, Africa, Asia and Oceania, Brazil, China, Europe, Global, India, Indonesia, Latin America, Other or unknown, and U S and Canada. The graph plots bars for food and agriculture, forests, and total. The values are 22, 10, and 32 for Africa. 2, 0.5, and 3 for Asia and Oceania. 7, 21, and 29.5 for Brazil. 3, 2, and 7 for China. 35, 25, and 60 for Europe. 40, 35, and 75 for global. 9, 0, and 9 for India. 5, 12, and 19 for Indonesia. 2, 15, and 19 for Latin America. 0, 6, and 6 for other or unknown. 19, 9.5, and 8 for U S and Canada, respectively. Note, all values are approximated.

Source: Prepared by the author by estimating from the data presented by Desanlis (2022).

Figure 11.5

Average annual funding for sustainable energy by region (in $ billion).

Figure 11.5 Long description

The vertical axis ranges from 0 to 180. The horizontal axis represents regions, namely, Africa, Asia and Oceania, Brazil, China, Europe, Global, India, Indonesia, Latin America, Other or unknown, and U S and Canada. The graph plots bars for building, challenge fossil, clean electricity, cooling, industry, transportation, and total. The values are 0, 4, 24, 2, 0, 1, and 32 for Africa. 0, 4, 5, 1, 0, 0, and 12 for Asia and Oceania. 0, 0, 2, 1, 0, 0, and 4 for Brazil. 0, 8, 8, 3, 10, 4, and 38 for China. 30, 16, 22, 0, 18, 17, and 98 for Europe. 6, 35, 35, 15, 20, 14, and 120 for global. 2, 0, 30, 2, 2, 4, and 40 for India. 0, 1, 3, 0, 0, 0, and 4 for Indonesia. 0, 2, 1, 0, 0, 0, and 6 for Latin America. 0, 0, 6, 0, 0, 1, and 8 for other or unknown. 24, 44, 70, 0, 4, 24, and 164 for U S and Canada, respectively. Note, all values are approximated.

Source: Prepared by the author by estimating from the data presented by Desanlis (2022).

As Table 11.2 shows, between 2018 and 2022, a very small percentage of corporate philanthropic funding has gone into climate, though one can witness an almost 50 percent increase (of course at a much lower base as compared to funding from other sources). However, substantial opportunity remains in the context of adaptation and mobiliing funding. As such, there was a sharp increase in corporate philanthropic funding overall in 2020, possibly because of the pandemic, but that was not associated with any concomitant rise in climate and nature funding. Rather, there seems to be an increase only after 2020.

Table 11.2Corporate philanthropic funding for climate and nature themes

Table 11.2Corporate philanthropic funding for climate and nature themes

Year	Climate and nature funding ($ billion)	Others ($ billion)	Total ($ billion)	Share of climate and nature funding (%)
2018	0.4	9.4	9.8	4.08
2019	0.4	9.6	10	4.00
2020	0.4	23.4	23.8	1.68
2021	0.5	12	12.5	4.00
2022	0.6	11.7	12.3	4.88

Source: Prepared by the author on the basis of GAEA and WEF 2024.

A group of twenty-nine philanthropists made notable climate pledges, such as the $4 billion committed at the Global Climate Action Summit in 2018, with a target of reaching $6 billion by 2025 (GAEA and WEF 2024). Climate-focused giving by foundations grew by 14 percent between 2019 and 2020, totaling between $6 and $10 billion, with individuals contributing the majority (Desanlis Reference Desanlis, Matsumae, Roeyer and Yazaki2021). However, these promising trends still leave adaptation underfunded relative to mitigation.

Philanthropy for Climate Finance in India

In India’s federal structure, the states own the primary responsibility for adaptation-related interventions. Significant adaptation investment gaps exist at the state levels as revealed in the updated State Action Plans on Climate Change for many of the states (Sikka et al. Reference Sikka, Jena, Chakravarty and Pal2024). The collective annual investment requirement for just six states amounts to $5.21 billion from 2021 to 2030 (Sikka et al. Reference Sikka, Jena, Chakravarty and Pal2024). Financing climate adaptation is a major challenge for states, already stretched by the economic slowdown and COVID-19’s impact. The new fiscal rules have placed not only borrowing constraints but also pressures to bring fiscal disciplines by reducing existing debt burdens. This has restricted the states’ ability to raise funds for bridging the adaptation funding gap.

India needs a unified approach to climate risk and a clear system to assess how development programs address vulnerabilities. Despite these hurdles, momentum is growing, with new plans and policies taking shape nationwide, though progress varies widely across states. There is a need to establish a common framework across the states and the union territories for climate risk and a systematic methodology for evaluating the extent to which development programs address climate risk and vulnerability. However, the progress and focus of policies and schemes related to climate adaptation vary from state to state.

Can philanthropy play a role here in India in bridging the adaptation financing gap? Overall, Indian philanthropy has shown impressive growth, with private contributions reaching $13 billion in FY 2022, largely driven by CSR, family philanthropy, and retail giving. CSR spending alone has grown by 13 percent annually and is projected to maintain this upward trend, while family philanthropy and retail contributions continue to increase, bolstering the sector overall. In 2023, Indian philanthropy grew by 10 percent, indicating its steady expansion and rising potential (ICC 2024).

Despite this growth, only 0.5 percent of domestic philanthropic funding is directed toward climate action, meeting just 10 percent of India’s climate financing needs (ICC 2024). This limited allocation reveals a critical funding gap and a significant opportunity for philanthropy to support climate adaptation and resilience. Currently, most private philanthropic capital is focused on education, health care, and poverty alleviation (ICC 2024). However, with the sector’s expanding capacity, India’s philanthropic community is well positioned to shift resources toward climate resilience.

According to an India Climate Collaborative (ICC) study, Indian philanthropy has shown a concentrated effort in certain high-visibility sectors, with clean energy receiving the lion’s share – 30.8 percent – followed by agriculture, forests, and ecosystems at 23.7 percent. Urban resilience and rural adaptation account for 17.6 percent of the total funding (ICC 2024). Table 11.3 presents a snapshot of the sector-wise climate financing in India with most and least funded subsectors (2018–2023).

Geographically, the funding landscape is equally uneven. Regions such as Andhra Pradesh, Karnataka, Maharashtra, and Uttar Pradesh attract a disproportionate share of philanthropic support, receiving roughly one-third of CSR contributions between 2018 and 2023. In stark contrast, highly climate-vulnerable states such as Assam receive a mere fraction of this funding – less than 2 percent (ICC 2024).

Indian philanthropy, driven by leading organizations such as Tata Trusts, Rohini Nilekani Philanthropies, the MacArthur Foundation, and EdelGive Foundation, has the potential to play a transformative role in advancing climate adaptation efforts. Through the Indian Climate Collaborative (ICC), these entities are working together to strengthen India’s climate ecosystem and mobilize philanthropic funding to tackle climate risks.

Encouragingly, Indian philanthropy is increasingly embracing collaboration, bringing together various stakeholders through a 4P approach – public, private, philanthropic, and people – harnessing the collective power of these sectors to drive meaningful change.

One notable initiative is the Harit Bharat Fund, co-created by ICC and the World Resources Institute. This fund aims to accelerate land restoration in India, mitigating climate risks while simultaneously enhancing livelihoods, improving nutrition, and bolstering food security. It adopts a dual funding mechanism providing grants for nonprofits and low-interest loans for for-profit organizations (ICC 2024).

Therefore, philanthropic investments are strategically redirected toward climate adaptation, especially in vulnerable regions and sectors, India can harness this funding to address the pressing climate challenges it faces, filling critical gaps in adaptation finance and driving long-term, sustainable solutions.

Concluding Remarks

The goal of this chapter is to highlight the pivotal role played by philanthropy in supporting adaptation financing. This can be summarized in five points. First, adaptation projects, perceived as yielding low short-term economic returns, possess high long-term social benefits. Philanthropic funding can de-risk investments, directly engage communities, and establish sustainable climate-resilient initiatives supporting local livelihoods.

Second, philanthropy can blend private and public funds to reduce barriers to innovative investments in such projects, thereby creating a business case. Start-ups addressing socioeconomic challenges like climate-resilient infrastructure often face high administrative hurdles and lack investment pipelines. Philanthropic organizations can facilitate processes for these enterprises, enhancing their financial viability.

Third, philanthropy offers technical assistance to overcome knowledge gaps in adaptation projects. This includes providing advisory services, training, and operational guidance to improve the business sustainability of initiatives, ultimately boosting their investment performance.

Fourth, philanthropic capital is uniquely positioned to invest in long-term, transformative solutions across sectors and geographies, especially in areas where private and public financing struggle to reach. Funders, particularly those from emerging sectors like “next-gen” philanthropists, can take on higher-risk projects, experiment with diverse financial instruments, and promote collaboration among stakeholders. This flexibility enables philanthropists to support initiatives that advance climate resilience and adaptation in ways that may otherwise remain underfunded.

Finally, a key strength of philanthropy is its ability to provide unrestricted funding without expecting a return, which allows for sustained, ecosystem-wide support. Hence, philanthropy is a promising solution to addressing the gap in financing climate adaptation.

The following recommendations are made:

• First, governments need to foster an enabling environment for philanthropy to thrive, beyond fiscal incentives such as tax exemptions. Simplified entry and operational norms, performance recognition, and support for innovative blended finance products can enable philanthropy to channel resources effectively toward SDGs.

• Second, a centralized database tracking philanthropic funding can aid DFIs, MDBs, and other stakeholders in accessing, monitoring, and assessing financial flows. This can enhance transparency and reshape global funding mechanisms.

• Third, it is often found that the collaboration between philanthropy and governments aims to create public goods but is hindered by trust issues, stringent regulations, and accountability gaps. Clear demarcation of roles and alignment of objectives among stakeholders can mitigate overlaps, foster innovation, and establish long-term partnerships.

• Fourth, emerging economies such as India, China, and Brazil are shifting the development finance narrative. However, North–South funding disparities persist. While philanthropy can address these gaps by facilitating dialogues, stakeholder consultations, and localized funding solutions, establishing data hubs and investment options sourced from the North can bolster financing for climate adaptation in developing countries.

In summary, philanthropy holds significant potential to address the urgent challenges of climate adaptation, particularly in regions most vulnerable to climate impacts. While government and private-sector investments are crucial for scaling climate action, philanthropy can fill critical funding gaps, catalyze innovation, and support high-risk or early-stage initiatives that may not attract traditional financing. However, strategic reforms, collaboration, and data-driven approaches are essential for maximizing its impact.