Just 3.5 per cent of global climate finance has been directed at projects focusing on the urban poor over the past two decades, a new report has found. The findings highlighted a major funding gap for low-income communities disproportionately affected by climate change.
The report, Climate Finance for the Urban Poor: A Review of Global Climate, was launched by Cities Alliance at 29th Conference of Parties (COP29) to the United Nations Framework Convention on Climate Change in Baku, Azerbaijan, on November 18, 2024. Cities Alliance, a global partnership dedicated to addressing urban poverty and supporting sustainable city development, evaluated data from 22 climate funds covering 3,428 projects.
Of these, only 225 projects had an urban focus and a mere 74 targeted both urban areas and poor communities. The total funding allocated to these projects was approximately $1.2 billion, just 3.5 per cent of the $33.4 billion approved by global climate funds between 2003 and 2023.
More than half (53 per cent) of the funding — $620 million — was directed towards sub-Saharan Africa and East Asia and the Pacific, where a large proportion of the world's slum dwellers reside. However, South Asia, another region with significant informal settlements, accounted for just seven projects, less than 10 per cent of the total, receiving only 4 per cent of the funding ($40 million).
The majority of urban projects targeted adaptation, with just over half (51 per cent) of the funds allocated to this purpose. Nearly half of adaptation funding for the urban poor was focused on environmental policy and protection. Water and sanitation projects received about one-quarter of the funding, while disaster prevention and preparedness, including urban resilience initiatives, accounted for slightly less.
Mitigation projects, on the other hand, concentrated primarily on transport, such as bus rapid transit systems and improved public transport networks (over 50 per cent), followed by energy projects (just over 25 per cent).
Currently, over one billion people live in slum conditions globally, a number that could double to two billion by 2030. These populations are increasingly vulnerable to direct climate impacts, such as heatwaves, droughts and flooding, as well as secondary effects like water and food insecurity.
The report highlighted the barriers preventing adequate financing for these communities. These included inaccessible funding mechanisms due to donor requirements, national strategies that failed to prioritise the urban poor and limited involvement of local communities and civil society organisations.
The report underscored the urgent need to address this funding gap and offers recommendations for donors, national and local governments and urban actors to better target climate finance. Key suggestions included simplifying funding mechanisms, prioritising informal settlements in national strategies and increasing engagement with local organisations and urban communities.
By improving access to climate finance, these measures aim to bolster climate adaptation and mitigation efforts for the urban poor, helping to protect some of the most vulnerable populations from escalating climate impacts.