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Section 4
Section 1
Section 4
There is sufﬁcient global capital and liquidity to close global 
investment gaps, given the size of the global ﬁnancial system, 
but there are barriers to redirect capital to climate action 
both within and outside the global ﬁnancial sector and in the 
context of economic vulnerabilities and indebtedness facing 
many developing countries (high conﬁdence). For shifts in private 
finance, options include better assessment of climate-related risks 
and investment opportunities within the financial system, reducing 
sectoral and regional mismatches between available capital and 
investment needs, improving the risk-return profiles of climate 
investments, and developing institutional capacities and local 
capital markets. Macroeconomic barriers include, amongst others, 
indebtedness and economic vulnerability of developing regions. 
(high conﬁdence) {WGII SPM C.5.4; WGIII SPM E.4.2, WGIII SPM E.5, 
WGIII SPM E.5.2, WGIII SPM E.5.3}
Scaling up ﬁnancial ﬂows requires clear signalling from 
governments and the international community (high conﬁdence). 
Tracked ﬁnancial ﬂows fall short of the levels needed for 
adaptation and to achieve mitigation goals across all sectors and 
regions (high conﬁdence). These gaps create many opportunities 
and the challenge of closing gaps is largest in developing 
countries (high conﬁdence). This includes a stronger alignment of 
public ﬁnance, lowering real and perceived regulatory, cost and market 
barriers, and higher levels of public ﬁnance to lower the risks associated 
with low-emission investments. Up-front risks deter economically 
sound low carbon projects, and developing local capital markets are an 
option. Investors, ﬁnancial intermediaries, central banks and ﬁnancial 
regulators can shift the systemic underpricing of climate-related risks. A 
robust labelling of bonds and transparency is needed to attract savers.