The final workshop of the Sharm el-Sheikh Dialogue on making global finance flows consistent with climate-resilient development pathways concluded in Rome with a stark divide over how to implement Article 2.1(c) of the Paris Agreement. Held between September 6 and September 7, 2025, this was the second workshop of the year, with the previous one held in June at Bonn, Germany.
The participants at the dialogue focused on two core themes: a stocktake of actions taken on Article 2.1(c) since the Paris Agreement and reflections on the Dialogue’s work from 2023 to 2025. The discussions revealed a clear consensus on the scale of the challenge and acknowledged that significant action is already underway in many parts of the world. However, major disagreements emerged on whether the implementation of Article 2.1(c) should be driven by global top-down regulations or by nationally determined pathways that prioritise equity and address historical imbalances.
A recurring theme across the three years, and starkly evident in Rome, was the absence of a common interpretation of Article 2.1(c)’s scope. The Standing Committee on Finance (SCF) noted the lack of a “common vision” on what constitutes action relevant to the article, which has led to fragmented and self-defined implementation.
Despite this limitation, one of the contributors to the Sixth Biennial Assessment Report, Charlene Watson, presented key data points, highlighting a 40 per cent increase in sustainable finance regulations since 2022, with 38 per cent of these emerging from developing economies. There has also been an increase in green taxonomies which cover both mitigation and adaptation, although a majority of these are concentrated in North America and Europe, she noted.
A case study on Just Energy Transition Partnerships (JETPs), presented by Professor Celine Tan from the University of Warwick served as an examination of top-down, donor-driven models for mobilising finance in developing countries. The analysis revealed significant gaps between pledges and needs, with JETPs in South Africa and Indonesia covering only 12 to 13 per cent of the required financing.
The case study revealed an overreliance on debt instruments within JETPs with grants comprising a mere 4 to 6 per cent of financing. Moreover, a large portion of financing has been conditional on host states adopting specific regulatory and policy reforms aimed at enabling market-led green transitions. This raised concerns about JETPs undermining national development ownership as well as the long-term sustainability of financing.
The contractual arrangements under JETPs were shown to increase the state’s exposure to volatility in global financial markets alongside the increased risks of a regulatory standstill—wherein the potential threat of lawsuits from investors becomes a barrier to state-led reforms. The exit of the United States from the South Africa JETP was also cited as evidence of the instability of donor-driven initiatives.
Speakers from developing nations consistently framed the discussion around systemic barriers, and the principles of equity and Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC). The negotiator from The Gambia, Isatou Camara, highlighted the biased credit ratings system as a primary disenabler, noting that while the real default rate for LDCs is 6.3 per cent, the perceived risk is 14.2 per cent. This is a distortion that punishes vulnerable countries with unfairly high borrowing costs.
South Africa’s delegate, Debra Swanepoel, highlighted ‘global disenablers’ such as debt distress, high cost of capital, unilateral trade measures, and the reprioritisation of Official Development Assistance (ODA) budgets away from climate needs. Honduras’ Elena Pereira pointed towards the need for International Financial Architecture (IFA) reforms that tackle these systemic disenablers, while also pressing for support under Article 9 of the Paris Agreement (which mandates the flow of finance from developed to developing countries) as a crucial part of implementing Article 2.1(c).
Many parties called for the continuation of a UNFCCC process to provide guidance and safeguards on the issue of greening global finance flows, while others opposed any further work. Delegate of Saudi Arabia, Tamim Alothimin, speaking on behalf of the Arab Group, opposed further formal work on Article 2.1(c) within the UNFCCC process. They reasoned that various countries are already carrying out domestic actions, such as creating green taxonomies, and more discussions could add to the burdens of developing countries and potentially infringe on the national sovereignty of countries. For ensuring transparency and accountability, they suggested that unified reporting measures can be explored via discussions on Article 9.5 of the Paris Agreement (which asks developed countries to provide biennial updates on their contribution and calls for developing countries to do so on a voluntary basis).
Other developing countries differed on this. Ritika Bansal, deputy director at the Union Ministry of Finance, spoke for India. She stated that despite discussions, linkages with Article 9 and the impacts of unintended consequences of greening finance flows by the Global North have remained insufficient. And, that while domestic actions on aligning finance with climate goals would have happened without these discussions on Article 2.1(c), the UNFCCC space needs to send a unified signal to non-Party financial actors (such as multilateral development banks and international fnancial institutions) on how to operationalise Article 2.1(c) in a manner that is tailored to national circumstances and is premised on equity and CBDR-RC.
Developing countries, particularly the highly vulnerable Least Developed Countries, pointed to the need for ensuring the adaptation finance gap is filled. This remains a persistent concern over the past several years of discussions on climate finance.
Overall, while developing countries posited their concerns about a top-down, prescriptive approach to implementing Article 2.1(c), there was broad consensus on the utility of discussions in the UNFCCC for sending ‘strong signals’ to global financial actors.
As the workshop concluded, country delegates and civil society observers were asked to state their priorities to be included in the concluding report of the Sharm el-Sheikh Dialogue. The report will guide the next steps on this crucial finance goal of the Paris Agreement. Most countries asked to continue the conversation on aligning finance flows with the Paris Agreement, but not necessarily in the erstwhile workshop mode. The co-chair’s annual report is to be submitted at COP30 in Brazil, where another contentious finance issue, the Baku to Belem Roadmap to $1.3 trillion of climate finance is slated for updates.