“Greenhouse gas emissions keep growing. Global temperatures keep rising. And our planet is fast approaching tipping points that will make climate chaos irreversible. We are on a highway to climate hell with our foot on the accelerator.”
Introduction
The significance of the 28th United Nations Climate Change Conference of the Parties (COP28) in the global dialogue on climate action cannot be overstated. Set in Dubai, this gathering of climate leaders, advocates, and civil society representatives marks a pivotal moment in our journey towards a more sustainable future, with Climate Finance topics central to the discussions.
Climate finance, in its essence, embodies the financial streams and investments aimed at supporting mitigation and adaptation activities to counter climate change.
This year, COP28 unfolds against a backdrop of efforts aimed at transforming financial institutions and mobilizing new funds. Significant steps have been made towards this end, including:
- Updates to multilateral development banks.
- Discussions of debt restructuring held at the Paris Summit for a New Global Financing Pact.
- The United Arab Emirates’ announcement of a $4.5 billion fund for clean energy in Africa.
But, despite these efforts, the stark reality remains that global climate finance remains alarmingly inadequate to keep the global temperature rise within the crucial limit of 1.5 degrees Celsius above pre-industrial levels.
The discrepancy highlights an urgent need for increased private sector investment, particularly in the Global South and for adaptation projects. A need that becomes even more evident given the past and current state of climate finance.
The Current State of Climate Finance
As we approach COP28, the state of climate finance reveals a rapidly evolving landscape. In 2021/2022, average annual climate finance flows nearly doubled from 2019/2020 levels, and reached nearly USD 1.3 trillion. This significant increase was mainly due to a surge in mitigation finance, particularly in the renewable energy and transport sectors, accounting for USD 439 billion of the growth. Notably, methodological improvements and new data sources have also contributed substantially, enhancing the tracking and understanding of climate finance flows.
Global trends in climate finance
The distribution of climate finance remains uneven, both geographically and sector-wise. Developed economies continue to mobilize the majority of climate finance, with China, the US, Europe, Brazil, Japan, and India receiving 90% of the increased funds. This concentration highlights significant gaps in climate finance in other high-emissions and climate-vulnerable countries. Additionally, while energy and transport sectors attract the bulk of mitigation finance, industries like agriculture and emerging technologies like battery storage and hydrogen still receive disproportionately less funding.
The adaptation finance, although reaching an all-time high, falls far short of the estimated needs, particularly for developing countries. Moreover, this finance is predominantly driven by public actors, with private sector contributions remaining fragmented.
In summary, while climate finance has grown significantly, challenges in equitable distribution, sector coverage, and the scale of investment remain. These issues underscore the need for a more coordinated and strategic approach to climate finance, a critical topic for discussion and action at COP28.
Climate Finance Challenges
Despite notable progress in climate finance, challenges persist, particularly in equitable distribution and meeting escalating needs. It’s a simple truth that the current investment of 1% of the global GDP, is simply nowhere near enough to support the vast scale of initiatives needed to support those climate initiatives that are required to keep us within tolerable benchmarks. Looking forward, the need for climate finance is projected to increase dramatically – By 2030, annual requirements are expected to rise steadily, reaching over $10 trillion each year from 2031 to 2050. This indicates that climate finance must increase at least five-fold annually to mitigate the worst impacts of climate change effectively.
Delay in meeting these investment needs not only escalates the costs associated with mitigating global temperature rise but also with managing its impacts. The economic burden of continued business-as-usual investments includes:
- Heightened weather-related damages
- Increased production costs
- Substantial health expenses.
The geographical concentration of climate finance adds to the challenge, with developed economies, notably East Asia, the Pacific, the US, Canada, and Western Europe, mobilizing the majority of these funds. In contrast, less developed countries, particularly vulnerable to climate change, receive a significantly smaller share of global climate finance, exacerbating existing disparities. The private sector’s contribution, though growing, remains insufficient in scale and pace, particularly in emerging markets and developing economies.
These investments are vital to ensure that those most vulnerable to the impacts of climate change, yet least responsible for its causes, have the resources necessary to mitigate, adapt to, and ultimately overcome the challenges posed by this crisis.
Addressing these challenges necessitates a concerted effort to increase funding, enhance equitable distribution, and foster global collaboration, ensuring that all regions can effectively combat and adapt to climate change.
Opportunities and Innovations
Climate finance at COP28 is a dynamic arena, marked by both challenges and breakthroughs. Innovative market-driven solutions like tradable carbon credits* and debt-for-nature swaps are gaining traction. However, the absence of universally recognized climate finance parameters leads to discrepancies in reported investments. Experts advocate for more equity financing from commercial investors and stress the need for institutional capacity in poor countries to manage these investments.
Accountability in meeting financing promises remains a critical challenge, with wealthier nations often falling short of their responsibilities. COP28 discussions will likely focus on risk-sharing strategies, blending public and private money, and increasing grants to developing countries for local project ownership. Multilateral bank reforms are also on the agenda to attract more private finance for vulnerable communities. The European Union’s Sustainable Finance Disclosure Regulation, implemented in 2023, is a step towards addressing greenwashing in investor markets.
Overall, COP28 presents an opportunity to reshape climate finance, emphasizing transparency, equity, and innovation to meet the urgent needs of a warming world.
The Role of Governments and Private Sector
At COP28, the evolving roles of governments and private sectors in climate finance will take center stage, and reflect a shift from traditional paradigms that highlights the increasing emphasis on voluntary contributions, while moving away from the erstwhile model of historical financial responsibilities of developed nations towards developing ones. This redefinition marks a notable departure from longstanding multilateral frameworks, spotlighting equity concerns in global climate finance.
Discussions at COP28 will focus on the need for reinvigorating trust and momentum in international climate processes. The Global Stocktake (GST) at COP28 underscores this, revealing a significant shortfall in current efforts to limit global warming. The summit must serve as a focal point for negotiating new financing arrangements, particularly the establishment and operationalization of the new Loss & Damage Fund. This fund represents a critical juncture in climate finance, with developed countries advocating for voluntary contributions despite pressures from developing nations for acknowledgment of historical financial responsibilities.
The contentious nature of funding sources for the Loss & Damage Fund underscores broader debates about the future financial obligations under climate agreements. Despite the insistence of developing countries on acknowledging historical responsibility, the final agreements lean towards voluntary support, indicating a potential weakening in the differentiation between the contributions of developed and developing countries. This outcome raises concerns about the adequacy and operationalization of the Fund.
These negotiations and the decisions made at COP28 will have profound implications on the future trajectory of international climate finance, setting the tone for how both government policies and private sector investments will shape our collective response to the climate crisis.
Conclusion
In conclusion, COP28 represents a watershed moment in the evolution of climate finance. The conference is not just a forum for discussion, but a crucible for action, where the urgency of climate change meets the complexities of global finance.
As the world grapples with the challenges of equitable distribution, scaling of investments, and fostering collaboration, the roles of governments and private sectors are undergoing a transformative shift. Embracing this change requires a commitment to innovation, transparency, and equity. The decisions and strategies forged at COP28 will be critical in shaping a sustainable, resilient world, where finance is not just a tool for growth, but a beacon of hope for a planet facing an existential threat. As we look ahead, the spirit of COP28 must galvanize us to create a financial framework that is not only robust and dynamic, but also inclusive and responsive to the needs of those most vulnerable to climate change.
(*) – For an in depth review on the evolution of emissions, climate impacts, and human activities exacerbating the problem, as well as how Carbon Credits can be part of the solution, check out our latest report here.
Image credit
Photo by Markus Spiske on Unsplash
Insetting program design starts with your supplier map. The carbon claim comes much later.
Consider a coffee procurement team that funds a farm intervention before checking its sourcing data. The supplier aggregates coffee lots from several regions. The buyer lacks farm-level traceability. Another purchaser expects to report the same outcome. A more attractive project brochure solves none of these problems.
If the distinction between a value-chain intervention and a purchased credit is still open, read CCC’s Insetting vs Offsetting guide before you set the brief.
Insetting program design begins with the purchasing relationship and works outward. You need to decide 1) where an intervention belongs, 2) what business problem it addresses, 3) who pays for it, 4) how results will be measured, and 5) what the evidence will let you say about them. This five-step playbook turns that sequence into a procurement plan.
Step 1: Insetting program design starts with supplier mapping
Start with the commodities that matter most to your Scope 3 inventory and sourcing continuity. Ask finance for spend by supplier, sustainability for the emissions baseline, and category managers for origin and volume records. Then identify which suppliers can trace material to a jurisdiction, sourcing region, producer group, or individual land-management unit.
The level of traceability affects what you can account for. Under the GHG Protocol Land Sector and Removals Standard, the spatial boundary for purchased land-based products depends on the traceability associated with each volume. Farm-specific factors or removals require physical traceability through an acceptable chain-of-custody model. A contract with a tier-one trader, by itself, does not establish a link to the farms behind its deliveries.[1]
Build a first-pass table with five columns: commodity and annual volume; supplier and origin; current traceability level; land-use and production risks; and the business owner who can change the purchasing terms. Mark missing data plainly. A blank cell is cheaper to fix before a program starts than after a claim is drafted.
If your company sets an SBTi Forest, Land and Agriculture target (FLAG), keep its land-related target boundary separate from energy and industry emissions. The current FLAG guidance also requires relevant companies to assess primary deforestation-linked commodities in their value chains.[2]
Step 2: Choose a commodity and jurisdiction for a pilot
Select one supply corridor where the sourcing connection can be established and procurement has a reason to stay. A useful pilot has repeat purchases, suppliers willing to share records, an intervention matched to a diagnosed problem, and a defined plan to measure the result. Carbon potential alone is a poor selection rule if the supplier cannot deliver the crop your business needs.
Compare candidate regions on land-use risk, supplier concentration, local rights and tenure, the availability of baseline data, and exposure to drought, erosion, or forest conversion. Check the relevant legal requirements separately. A nature project does not satisfy a due-diligence obligation merely because it has a carbon method attached.
Consider a coffee buyer sourcing from two districts. In the first, producer-group records identify the farms, while recent dry seasons have increased rejected green coffee lots. In the second, deliveries pass through several intermediaries and farm origins are unknown. Pilot shade management in the first district, with local agronomic advice and quality checks built into the plan. The buyer can trace purchases there and test the intervention against a defined sourcing problem.
Use a short decision memo to record why the selected corridor beats the alternatives, what remains uncertain, and what would stop the pilot. That memo is the first control against a project drifting toward whatever happens to photograph well.
Step 3: Design the supplier engagement and commercial model
The intervention needs an owner on each side of the contract. Decide who supplies planting material or training, who maintains the practice, who bears the cost if a harvest disappoints, and how long the buyer expects to purchase from participating suppliers. Where smallholders participate, budget cash flow and technical support for practices that offer a later return.
Put these terms in a supplier agreement or pilot addendum. It should cover eligible farms and volumes, consent to data collection, access for monitoring, any land or carbon rights that matter, benefit sharing, and what happens if the purchasing relationship ends. Ask local counsel and producer representatives to review the arrangement. The Accountability Framework is a useful reference for supply-chain work involving forests, ecosystems, and human rights.[3]
Avoid assigning an automatic carbon benefit to the buyer. The contract should say which party has the right to report each outcome, how overlapping claims will be checked, and how any issued credits will be handled. A reduction reported in a buyer’s inventory cannot simply be sold for someone else’s offset claim without an accounting review. SBTi FLAG guidance excludes purchased credits used as offsets from near-term FLAG target achievement.[2]
Set commercial measures beside environmental ones: delivered volume, rejection rate, supplier retention, and procurement cost. They tell you whether the program works as a supply-chain investment, even if carbon accounting takes longer to resolve.
Step 4: Build monitoring, reporting, and verification before rollout
Agree on the baseline and data flow before paying for a full rollout. Identify the land units or sourcing regions in scope, the practices that change, the records suppliers already keep, and the additional measurements the program requires. Decide which data can come from field visits, transaction records, or remote sensing, and who checks each source.
For carbon, separate three questions. Did the practice happen? Did emissions or removals change under an applicable method? Can the buyer attribute a defensible share to its purchased goods without double counting? The GHG Protocol’s 2026 guidance includes dedicated chapters on spatial boundaries, data and methods, evaluating actions, credited outcomes, and assurance.[1] These are distinct jobs. A photograph of a planted tree answers only part of the first.
CCC’s MRV and Additionality article explains the separate evidence questions a project reviewer will ask.
Create an evidence file for every reporting period: dated supplier and farm records, purchase volumes, methods and emission factors, uncertainty, quality checks, and changes from the baseline. Specify who can challenge the data and how corrections are recorded. If a project also seeks credit certification, keep project accounting and corporate inventory accounting separate. The GHG Protocol says its land standard focuses on entity-level inventories and does not set the rules for credit certification.[4]
Start with the minimum viable measurement design that can survive review. Add complexity when the pilot tells you which data actually changes a decision.
Step 5: Decide what can be reported and claimed
Insetting program design needs reporting rules before the marketing copy. Procurement, sustainability, finance, and legal should agree on four distinct outputs: operational performance; observed land or nature outcomes; inventory effects, if the accounting criteria are met; and any separately issued credits. One dashboard can display them, but they should not share a single unqualified headline.
SBTi FLAG guidance allows certain land-based removals within a company’s operations or supply chain to contribute to FLAG pathways, subject to criteria including permanence, traceability, data quality, and allocation. It does not allow purchased offsets to meet near-term FLAG targets.[2] Eligibility therefore depends on evidence and the applicable target rules, not on calling an activity “insetting.”
Draft a claims register. For each proposed sentence, record the period, boundary, data owner, calculation method, reviewer, and whether the result is measured, estimated, or still a goal. If the evidence supports only “we funded a pilot with 200 farms,” say that. Do not turn a funding fact into a verified emissions reduction.
What good looks like by year three
Treat year three as a review point, not a promised payback date. A mature pilot should have mapped participating supply volumes, a stable supplier agreement, a repeatable data collection process, and a comparison of commercial and environmental results against the baseline. It should also have a documented answer for outcomes that cannot be included in the buyer’s inventory.
Scale only where the pilot improves a sourcing decision and the evidence can follow the product. If neither condition holds, redesign the intervention or change the corridor. A disciplined program can conclude that a site is unsuitable. That is useful procurement intelligence.
Discuss your insetting program with CCC
Carbon Credit Capital designs nature-based supply chain investments around sourcing needs and measurable sustainability outcomes. Schedule a consultation with our carbon and sustainability experts to map your tier-one supplier network, FLAG exposure, and first pilot decision.
Sources
[1] GHG Protocol, Land Sector and Removals Standard, version 1.1, and companion Guidance, June 2026: https://ghgprotocol.org/land-sector-and-removals-standard ; https://ghgprotocol.org/land-sector-and-removals-guidance
[2] Science Based Targets initiative, Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, especially pp. 16–17, 37, and 41: https://sciencebasedtargets.org/resources/files/SBTiFLAGGuidance.pdf
[3] Accountability Framework initiative, Accountability Framework and guidance for companies: https://accountability-framework.org/
[4] GHG Protocol, Frequently Asked Questions: Land Sector and Removals Standard, questions 10 and 18: https://ghgprotocol.org/blog/frequently-asked-questions-land-sector-and-removals-lsr-standard
Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.