By Rowan Putman
How the end of an era can catalyse a more resilient and impactful approach to funding climate action.
2025 has been an eventful year in the world of development and climate finance to say the least. The unfortunate developments in the US and wider afield sent shockwaves through the climate and development sectors. It’s not just one event, but a confluence of pressures: the closure of USAID is a seismic shock, compounded by a widespread reprioritisation of aid towards defence and other pressing concerns by many governments. Many governments and organisations are rolling back on promises and progress made, despite the intensification of climate impacts and critical deadlines approaching. Long-established institutions like the UN and other global organisations, long reliant on the funding made available through government commitments, have been forced to take stock and fundamentally rethink what to do with their new reality. Many have been rationalising their structures, priorities, processes and modes of operation, working hard to make fewer resources go that bit further to minimise their impact on the path towards realising their ambitions.
For many of us on the front lines, the impact has been immediate and in some cases very stark. Opportunities have frozen, programmes have been cancelled completely, and budgets for new initiatives have dropped significantly. It’s a moment of profound uncertainty, threatening to stall or reverse decades of hard-won progress. The question on everyone’s mind is: “What now?” or even “What’s next?”
But while the challenge is monumental, dwelling on the past is a luxury we cannot afford. Ever the optimist, this crisis is a powerful, if painful, catalyst. The era of over-reliance on a few large public funders is over. It’s time for a climate finance revolution and it’s a revolution we must lead together.
The end of an era: Acknowledging the system’s flaws
For too long, the architecture of climate finance has rested on pillars susceptible to the winds of political change. Over dependence on an albeit growing handful of sovereign funding streams has long left the sector exposed to the risk that any one or more governments might effectively pull the plug on their funding streams for any number of reasons such as, affordability, re-prioritisation, protectionist policies. Unfortunately, this has now come to pass. We see the consequences cascading through the system: payment cycles for critical work are slowing to a crawl – a reality we all have to navigate – and a general paralysis threatens to take hold as those with reducing funds and increasing ambitions work out how to navigate the path forward. This isn’t a failure of intent, but a failure of design.
Our future resilience depends on moving from a linear pipeline of aid to a dynamic, multi-source ecosystem of capital.
The blueprint for the revolution: Three pillars of a new climate economy
This new ecosystem must be built on a foundation of rigour, innovation, and strategic foresight. We see three pillars as essential to this transformation:
1. Go beyond ‘Good Intentions’ — Develop bankable projects
Many climate projects are noble in their goals but are structured as grant-dependent activities, not as viable investment opportunities. This structuring is the current norm, as these projects are consistent with cooperation and development policies agreed with the countries involved, as well as in line with internationally agreed targets such as the SDGs, DRR or UNFCCC. However, the first pillar of the revolution advocates for a radical focus on technical and financial rigour.
We must move past simply identifying needs, to building financially sound, ‘bankable’ projects. This means conducting realistic and deep market analysis, building solid and optimised budgets, integrating viable revenue models, and designing projects that can attract private capital by delivering a quantifiable return, not just a social one..
This first pillar involves tangible shifts in project design, such as providing dedicated project preparation services to develop climate-resilient agricultural systems that are structured to catalyse large-scale climate finance, as we have done for the Land Bank of the Philippines. The project is designed to create a transformational shift in Land Bank’s capacity to invest in climate-resilient agriculture (CRA) and water resources management. This will be achieved by strategically blending Green Climate Fund (GCF) financing with the bank’s existing and new lending programmes to de-risk and incentivise investments in sustainable practices for smallholder farmers. The project will leverage GCF grants and concessional loans to make these financial products more accessible and attractive. GCF lending is critical for the bankability of the CRA interventions, as without it, farmers and cooperatives will not take the risks and apply for the LANDBANK loan. By showcasing the viability and effectiveness of CRA technologies, the project aims to bridge the gap between the financing needs of smallholder farmers and the potential for private sector investment.
Another powerful example is our work with a leading, diversified conglomerate in a highly climate-vulnerable Small Island Developing State (SIDS). The group has extensive operations in agriculture and real estate and a strong commitment to sustainability, but required a clear pathway to translate these ambitions into bankable climate projects. We are developing a comprehensive funding access strategy to position them to secure large-scale international climate finance, pioneering a replicable model for mobilising private capital for adaptation in one of the world’s most at-risk regions.
E Co. started playing a proactive and strategic role in the climate finance ecosystem by identifying and accelerating high-potential projects that align with global mitigation and adaptation goals. Using over two decades of experience in project design, we have developed our own analytical frameworks that allow us to detect, assess, and prioritise projects based on their transformational potential, scalability, and alignment with market demand or donor mandates. Our sourcing approach goes beyond conventional project pipelines. We detect underexploited opportunities in emerging countries and vulnerable contexts, where innovative solutions can deliver meaningful climate change impact. Once projects are selected, we engage with stakeholders to co-design financing strategies tailored to specific donor instruments, including GCF, GEF, Adaptation Fund, multilateral DFIs, and blended finance vehicles. Our goal is to ensure that each project is not only technically and environmentally sound, but also financially viable and institutionally anchored, ready for implementation and long-term sustainability.
2. Speak the language of capital — Master blended finance
There is no shortage of private capital in the world, but it operates under different rules, timeframes, and risk appetites than public aid. The second pillar is becoming the crucial bridge between the worlds of climate impact and private investment. This is the art of blended finance. By strategically using the limited public or philanthropic funds available as ‘catalytic capital’, for things like guarantees or first-loss protection, we can de-risk projects and unlock multiples of private investment.
It’s about turning one dollar of grant funding into ten dollars of project investment. For example, as our 21st GCF insight notes, the Green Climate Fund’s (GCF) private sector portfolio has shown that every dollar of GCF funding can mobilise nearly $3.60 in private co-financing, a ratio that is constantly improving as new models are proven. We work with a range of private sector organisations, including leading asset managers and impact funds, who are increasingly seeking alternative funding to catalyse their climate adaptation and mitigation-focused equity funds. They recognise that climate finance instruments can act as a powerful de-risking tool, significantly improving their ability to attract private capital from other investors. We serve as a trusted partner, guiding them through the complexities of international climate fund application processes , from initial concept development to final approval. This includes providing strategic support and helping to manage critical engagement with stakeholders in their target countries to ensure their projects meet local needs and requirements.
An example of this is our ongoing work in Zambia, alongside the African Development Bank and the Government of Zambia. E Co. is supporting the development of climate finance roadmaps and project pipelines in key sectors such as water, solar power, and renewable energy, at both sectoral and city levels. We’re identifying financing pathways from multilateral development banks, bilateral partners, private investors, and climate funds. Through this work, we are ensuring that public funds create a ripple effect, so that every drop leads to lasting impact.
3. Build resilient systems, not just standalone projects
A brilliant project can fail in a weak or unpredictable policy environment. The final pillar is ensuring longevity. Finance is only half the battle. True transformation requires building the enabling environment for investment to thrive. This means working with national and local partners on policy development and institutional capacity building. We help create the clear regulations, stable governance, and local expertise that give long-term investors the confidence to commit.
This includes essential groundwork, like our work assisting the Government of Georgia with the development of its primary Energy Efficiency Law, creating a stable and predictable legal framework necessary to attract long-term investment.
What success looks like: A case in point
This model is not theoretical; it is already creating resilient pathways for climate action.
Consider our work in developing a Climate Finance Facility with the West Africa Development Bank (BOAD) to scale up solar energy investments. The programme targeted six Least Developed Countries in Francophone West Africa, aiming to increase their existing solar capacity by 400%. Instead of relying on a traditional grant-based approach, the facility was designed to explicitly incentivise private actors. It combines a dedicated financing mechanism with targeted technical assistance, supporting local developers in creating bankable solar projects from the ground up. This approach builds a sustainable, regional market that attracts private capital, diversifies the energy mix for millions of people, and is not dependent on a single public donor for its long-term success.
Our support in developing a GEF multi-country programme in East Africa with Farm Africa, UBS Optimus Foundation and DBSA is another example. This initiative aims to build capacity for smallholder farmers and agribusinesses to monetise climate resilience outcomes. The project strategically layers GEF resources onto a robust foundation of proven models, institutional relationships, and community engagement platforms. The GEF’s support provides catalytic financing to deepen and scale interventions that have already demonstrated technical feasibility and social acceptability. This approach directly aligns with the three pillars of our blueprint: it develops bankable projects, masters blended finance by using GEF resources to unlock larger investments, and builds resilient systems by leveraging existing local structures.
Based on our experience, philanthropic organisations are also adapting to this new reality. The UBS Optimus Foundation, for example, has a unique funding model that uses catalytic capital to amplify impact. In 2023, the UBS bank confirmed that it would add 10% on top of all client donations to the foundation, effectively making every £1.00 donated worth £1.10. This approach blends philanthropic funds with corporate investment, creating a powerful incentive for clients and allowing the foundation to de-risk and scale up projects that might otherwise struggle to attract funding.
Looking ahead
The tectonic plates of climate finance have shifted permanently. The challenges are real, but the opportunity to build a more diverse, resilient, and ultimately more powerful funding system is in our hands. At E Co, we are committed to being the architects and navigators of this new landscape. We believe this revolution is not only possible, but essential.
E Co. provides a range of services to support a wide range of organisations upstream of the decision to finance, including market assessment, strategy formulation, policy development, the design of bankable programmes and projects, fund support, training and capacity development and monitoring, evaluation and learning. We specialise in bridging the gap between complex technical climate challenges and finance. If this challenge resonates with your organisation’s immediate needs, or you need support in how to mobilise your funds to create a world sustainably transformed, I invite you to reach out to our Consulting team for a confidential discussion.
