Country positions on the quantum (i.e. the amount) and structure of the NCQG differ based on their understanding of the sources of finance that should count towards the goal. However, after three years of negotiations, there is now a shared understanding that public climate finance from bilateral and multilateral sources will be central.

Some developed countries believe this particular source of finance will not meet the trillions needed. Developed countries’ bilateral finance could increase from $43.4 billion to a range of $50 billion by 2025 and up to $111 billion by 2030 in a scenario with increased private mobilisation. However, even this increase in bilateral provision and mobilisation falls short of what developing countries have asked for.

Multilateral development banks (MDBs) have played a large role in the provision and mobilisation of international climate finance, thanks to both their direct finance and their capacity to de-risk and mobilise private finance. On Tuesday, MDBs jointly announced that they exceeded their 2025 climate finance projections, increasing direct climate finance by 25% and doubling private finance directly mobilised for climate over the past year.

These developments are worth unpacking, as are their implications for the NCQG. Under G20 guidance, MDBs have engaged in recent years in reforms aimed at strengthening their focus on climate action and other global public goods, growing their balance sheets and improving their speed and operational efficiency. Those reforms have, so far, yielded an additional $300-400 billion in lending capacity over the next ten years, as well as financial innovations that are beginning to have an impact on the MDBs’ private finance mobilisation. Some 30-50% of the additional firepower, depending on the individual MDB, is likely to be committed to climate finance.

But more can be done. Estimates by an Independent Expert Group (IEG) commissioned under the Indian G20 presidency suggested that measures including improved balance sheet efficiency, hybrid capital and fresh paid-in capital could enable MDBs to triple their annual lending to US$390 billion, and that changes in their operating models could lead to a quadrupling of private mobilisation to US$240 billion from the 2019 baseline. This mirrors an analysis by the Independent High-Level Expert Group on Climate Finance (IHLEG), which concludes that MDBs need to triple their financing by 2030 to deliver on the Paris Agreement. The Brazilian G20 presidency has just produced an MDB Roadmap that further details the nature and timelines for additional reforms (titled “Better, bigger and more effective MDBs”).

Even though there has been progress, the MDBs and their shareholders have so far failed to commit to (and be held accountable for) finance targets anywhere near the tripling envisaged by the IEG and IHLEG. Without ambitious targets, reform will remain piecemeal and will lack the necessary sense of climate urgency. So then, what will it take to get there?

1. Shareholders need to turn the G20 roadmap into MDB-specific plans through the boards of each of the MDBs and target ambitious growth paths combined with monitoring & accountability frameworks.
2. Shareholders must also signal their willingness to contribute fresh capital as reforms progress. Thus far, the focus has been on balance sheet stretching, but both the IEG and IHLEG agree that there will also be a need for fresh capital. Shareholders should realise that MDB capital, which can be leveraged by a factor of 10 or more, is a fiscally low-cost way of achieving climate finance goals.
3. Management will need to own and encourage MDB balance sheet innovations.
4. Management will also need to implement the organisational changes and integrated public-private strategies required to place private capital mobilisation at the core of their business models. Such profound changes to culture and business models are challenging, but essential in the face of shared global challenges.
5. Borrowing countries must press for these changes – it is their climate transitions and climate-compatible growth that needs financing. Their voices should be heard loud and clear in this debate; growing calls for MDB reform like Prime Minister Mia Mottley’s Bridgetown Agenda have been further emphasised by stakeholders. Without a sustained push from the borrowers, political will of the non-borrowing shareholders is bound to falter over time.

In opening remarks at COP29, UN Secretary-General António Guterres urged MDB stakeholders to ‘use [their] position to push for change’. The NCQG decision can be a springboard for climate finance in this critical decade. MDBs have an essential role to play. Are they up for it?