Developing countries are paying back more in climate finance loan repayments to wealthy nations than they receive in aid, according to new research by Oxfam and the CARE Climate Justice Centre. The study highlights a deepening financial injustice. Nations least responsible for climate change shoulder growing debt burdens. They do this to address a crisis largely caused by industrialized economies.
The report reveals that for every five dollars in climate finance developing nations receive, they are paying seven dollars back. Around 65 percent of all climate finance is now delivered in the form of loans. They are not delivered as grants. Vulnerable countries are forced to borrow to survive the escalating impacts of the climate emergency.
Researchers describe this imbalance as a form of “crisis profiteering” that undermines both global equity and climate action.
Wealthy Nations Profiting from Climate Loans
According to the Oxfam-CARE report, rich countries claim to have provided $116 billion in climate finance in 2022. Yet, when adjusted for over-reporting, the true figure is between $28 billion and $35 billion. This amount is less than a third of what was pledged.
Nearly two-thirds of this funding was issued as loans, often with market-level interest rates rather than concessional terms. As a result, developing countries’ collective debt has ballooned to $3.3 trillion. France, Japan, and Italy were identified among the nations most responsible for perpetuating this loan-heavy financing model.
In 2022, developing countries received $62 billion in climate loans. Yet, those loans are expected to generate repayments of up to $88 billion — a 42 percent profit for creditors. This means wealthy countries are earning money from the nations that are struggling. These nations are trying to adapt to the worsening effects of climate change.
The Poorest Nations Hit Hardest
The report highlights glaring inequalities in how climate finance is distributed. Least Developed Countries received just 19.5 percent of total public climate finance in 2021–2022, while Small Island Developing States received a mere 2.9 percent. Shockingly, over half of this limited funding came in the form of loans that must be repaid.
The world’s most climate-vulnerable nations are effectively paying to rebuild after disasters that they did not cause. Their growing debt obligations leave them with little capacity to invest in adaptation or resilience measures.
Furthermore, only 3 percent of total climate finance targeted gender equality — despite overwhelming evidence that women and girls are disproportionately affected by the climate crisis.
“Rich countries are treating the climate crisis as a business opportunity, not a moral obligation,” said Oxfam’s Climate Policy Lead, Nafkote Dabi. “They are lending money to the very people they have historically harmed, trapping vulnerable nations in a cycle of debt. This is a form of crisis profiteering.”
Climate Finance Cuts Deepen Inequality
Compounding the crisis, rich nations are implementing the most severe foreign aid cuts in more than six decades. According to OECD data, global aid fell by 9 percent in 2024. Projections show an additional 9 to 17 percent decline in 2025.
As a result, low-income countries are being forced to shoulder both the physical and financial burdens of climate change. In the past year alone, fossil fuel-driven disasters displaced millions across the Horn of Africa. They devastated 13 million people in the Philippines and flooded 600,000 in Brazil.
“Rich countries are failing on climate finance. They have nothing like a plan to live up to their commitments,” said John Norbo, Senior Climate Advisor at CARE Denmark. “Many wealthy nations are cutting aid, leaving the poorest to pay the price — sometimes with their lives. COP30 must deliver justice, not another round of empty promises.”
Adaptation Funding Critically Undervalued
The Oxfam-CARE report emphasizes that adaptation — the process of helping communities adjust to climate impacts — remains dangerously underfunded. Only 33 percent of total climate finance goes toward adaptation, while the majority supports mitigation projects that promise faster economic returns for investors.
This imbalance leaves communities without the resources they need to build resilience against extreme weather events, sea-level rise, and shifting agricultural patterns. Without a stronger commitment to adaptation, the gap between those who cause climate change and those who suffer from it will continue to grow.
Calls for Urgent Climate Finance Reform Ahead of COP30
Ahead of the COP30 climate summit, Oxfam and CARE are calling on wealthy nations to take immediate action to restore trust and equity in global climate finance. Their recommendations include:
- Fulfilling Climate Finance Commitments: Rich countries must deliver the full $600 billion pledged for 2020–2025 and establish a clear plan to reach $300 billion annually thereafter. This should align with the $1.3 trillion Baku-to-Belém roadmap.
- Ending Crisis Profiteering: The share of grants and highly concessional loans must increase dramatically to prevent further indebting vulnerable nations.
- Tripling Adaptation Finance: Wealthy nations should commit to tripling adaptation finance by 2030, using the COP26 goal to double funding by 2025 as a baseline.
- Funding Loss and Damage: The global fund for Loss and Damage must be adequately financed to support communities already suffering from irreversible climate impacts.
- Creating New Sources of Finance: Innovative mechanisms such as taxing the super-rich and fossil fuel windfall profits could generate over $1.6 trillion annually to support equitable climate action.
A Crisis of Justice, Not Just Finance
The findings highlight a moral crisis at the heart of international climate finance. Instead of repairing historical injustices, rich nations are deepening them through exploitative loan structures and broken promises.
For the world’s poorest communities, this is not just about numbers — it’s about survival. They are being forced to repay debts for a crisis they did not create, while facing intensifying floods, droughts, and heatwaves.
As COP30 approaches, the pressure is mounting on wealthy nations to shift from rhetoric to responsibility. Without genuine financial reform and increased solidarity, the promise of climate justice will remain unfulfilled — leaving millions trapped in a worsening cycle of debt and disaster.