By Victoria Verdesoto Phothirath and Mouna Lyoubi
As the dust settles on a busy week in the sweltering heat, London Climate Action Week (LCAW) leaves plenty to think on. The climate finance community gathered to discuss how countries can prepare for and respond to climate risks. The heat gave those conversations an unusually sharp edge. The irony was that an event on extreme heat by the Zurich Climate Resilience Alliance had to be cancelled because of the heat itself. Whereas past years leaned heavily on ambition and pledges, this year’s seemed more focused on delivery: less what should happen, more how it actually gets paid for and built.
With more than 1,000 events spanning 9 days in June, LCAW can be quite overwhelming. The running thread for our team this year has been a shift in focus towards systems thinking: how do different types of institutions and stakeholders, be it an insurance firm, a development bank, or a local government, come together to develop, fund and deliver climate action? Looking back across the week, three themes kept coming up: building capacity, closing the pipeline gap, and de-risking investment at every scale.
The Climate Deal: building capacity at every level
On Tuesday, we held an intimate, dynamic event showcasing our Climate Deal game, which we have already used in training and capacity-building events, namely for the CFAN programme at the Rocky Mountain Institute.
The game’s purpose is to match financial instruments to specific project concepts, following the principle of minimum concessionality. Participants learn how to stack different instruments and make judgement calls on their appropriateness for a given project and context, using a range of financial and economic metrics. This teaches participants the principles of financial structuring within a climate project context, and leaves them empowered to think beyond grant-only projects to the bigger picture. At E Co, we believe this is essential given the diminishing pool of public funding allocated to climate change and in the context of shrinking ODA budgets.
We are also passionate about making training less boring, and this is precisely the work we are carrying out for clients, and will also soon be available through our E Co. institute. It’s also the gap our 31st GCF insight, ‘Rethinking capacity building models for climate finance readiness, aimed to address: training is being delivered, but for many NDAs and Accredited Entities, particularly in SIDS and LDCs, the conditions to make it stick and translate into more projects aren’t fully there yet.
From ambition to investable pipelines
This was the theme that connected the Climate Resilience Finance Summit, the EBRD Green Cities conference, and the CCFLA panel we attended later in the week. Throughout all three, the conversation continually returned to the same core point: the hurdle is not the absence of capital, but rather a scarcity of standardised, investable options, or what our white paper, ‘Bridging the Investability Gap: Mobilising Private Capital for a Resilient Future,’ calls the broken bridge between climate ambition and private capital.
Whereas traditionally climate finance has flowed to mitigation rather than adaptation and resilience, a clear trend that has emerged these last two years is that investor appetite for climate resilience is real, but what’s missing are robust project pipelines, aggregation mechanisms and business models that can absorb that capital at scale.
Cities are very much at the front line of this challenge. At the EBRD Green Cities conference, which brought together mayors and experts from over 60 cities to mark a decade of transforming urban infrastructure, discussions centred on the essentials: accelerating electrification across transport and housing, delivering low carbon buildings, and modernising water infrastructure for climate adaptation. But to move these plans off the shelf and into reality, we have to rethink municipal finance. The private sector cannot just be a funder; it has to be a strategic partner.
Mayor Sefiani of Chefchaouen put this into perspective at the CCFLA event, pointing out that while billions are needed for adaptation in the Global South, cities face crippling structural barriers, from limited municipal creditworthiness to high transaction costs.
A related point came up again and again, from Climate Bonds Initiative to Standard Chartered to GFANZ: without common resilience taxonomies and definitions, investors struggle to identify what counts as genuine adaptation or resilience, and capital deployment stalls as a result. This is compounded by a broader shift in how climate risk is being understood. Physical climate risk is increasingly read as credit risk, which opens the door to embedding resilience directly into lending, insurance and investment decisions, rather than treating it as a parallel concern. Guterres made the same point from the podium. Speaking at the Climate & Development Finance Forum on 24 June, the UN Secretary-General said, “climate risk is economic risk, and finance ministries, central banks and public investment authorities need to treat it as core economic policy.’’
De-risking in practice: insurance, guarantees and project preparation
During both the Climate Resilience Finance Summit and the CCFLA panel on ‘Mobilising Private Capital for Cities Through De-risking in Practice,’ the same three tools kept coming up as the actual mechanics of unlocking private investment. The hard truth is that de-risking instruments already exist. The real obstacle is helping cities and projects actually access them.
Insurance is being repositioned as an enabler of investment in its own right. The industry is moving upstream, meaning insurers are getting involved at the very inception of a project to predict and identify risks early. But before a project even looks at insurance, it needs to establish a clear baseline of the risk mitigation steps it has already taken. This is what actually unlocks affordable pricing. Discussions also touched on integrating insurance with adaptation measures and sharpening risk pricing more generally.
Guarantees, alongside concessional capital and first-loss structures, remain essential for making non-bankable projects attractive to private investors who would otherwise stay on the sidelines. The panel stressed that to attract guarantees, one needs strong local policy environments. A single, well-placed guarantee can unlock a massive wave of follow-up investment, with the ultimate goal of phasing out the need for guarantees as the local market stabilises.
Project Preparation Facilities (PPFs) act as an early-stage de-risking instrument by providing the upfront funding, legal expertise, and technical assistance required to systematically eliminate those uncertainties. This instrument supplements limited municipal capacity, ensuring the project is structured to international standards from day one. Cities rarely have the budget for these sunk costs, and private investors refuse to fund them. Moreover, technical assistance needs can grow exponentially depending on the geography.
Technology also emerged as a thread worth watching. A number of the commercially successful adaptation businesses in the room turned out, on closer inspection, to be technology companies (AI, satellite imagery, IoT, data analytics) whose products happen to improve resilience in different sectors, such as agriculture, forestry and infrastructure planning. That is an important and growing route for private equity into the space.
Local capital and community ownership
The summit was also a useful reminder that adaptation finance does not stop at the project or instrument level. Mobilising local capital remains a major obstacle, as locally led adaptation depends on stronger domestic financial systems, from local banks to pension funds to intermediaries capable of aggregating projects and deploying finance in local currency, alongside genuine product innovation in areas like microfinance.
Moreover, underpinning all of it is the question of community ownership. Effective adaptation finance means shifting decision-making closer to the communities it is meant to serve, through locally led planning, transparent funding flows, and stronger safeguards against capture.
This is deeply integrated with E Co’s approach. Our work supports country ownership by strengthening institutional capacity, improving access to climate finance and working alongside national and local partners to develop solutions that reflect local priorities rather than externally driven agendas. Building resilience is not only about securing finance. It also depends on ensuring that finance reaches the people and institutions best placed to deliver lasting results.
Where this leaves E Co.
These discussions hit right in E Co’s wheelhouse, reconfirming what we already do best: climate finance strategy and investment planning, adaptation and resilience finance, nature-based solutions, climate fund access, and innovative financial mechanisms. They also showed that we have moved from ambition to implementation, defining taxonomies and KPIs, developing pipelines of bankable projects, and ensuring local ownership and political alignment.
Backing that up is our recent membership of The Santiago Network that takes that support further, enabling us to provide technical assistance to countries with tailored, context-specific technical assistance on loss and damage for them to shape and lead action. It complements our work across adaptation, resilience and climate finance, strengthening our ability to support governments from investment planning through to responding to climate-related losses and damages.
The latest climate data leaves little doubt about the scale of the work ahead. But finance alone will not deliver resilience. Countries and cities need the skills, institutions and support to develop bankable projects, build credible investment pipelines and create the conditions that give private investors the confidence to commit capital over the long term.
