Philanthropies, businesses and governments ‘must urgently collaborate’ to close climate financing gaps

Climate finance was central to discussions at COP28 in Dubai, which came to a close this Wednesday (13 December). But discussions are not turning into investments at the necessary pace.

The world needs up to $3.5trn of additional investments each year to reach net-zero and restore nature.

Combined funding from business, government and philanthropic sectors is falling short, with 6% of 2025 investment needs met so far, and only 2% of philanthropic giving directed towards climate mitigation.

Case studies from a new report developed by the World Economic Forum in collaboration with McKinsey – The Role of Public-Private-Philanthropic Partnerships in Driving Climate and Nature Transitions – include the global coalition Mangrove Breakthrough, which secured the protection of 15 million hectares of mangroves worldwide.

It also showcases the reshaping of land degradation in Latin America through Initiative 20×20 and the Breathe London project on enhancing air quality.

Other proven partnerships include the Energy Transition Accelerator in developing countries.

World Economic Forum managing director Gim Huay Neo said: “For partnerships to work effectively, various stakeholders should be willing to come together to bring collective as well as individual expertise and resources to find solutions.

“Without working with other partners to find the right intervention points, it is difficult for a single institution to deploy their funds.”

Sharing the challenge, and the opportunity

The transition to a net-zero economy presents a critical and necessary shift but is unavoidably costly.

The financial gap lies in the extensive overhaul required in industries to adopt cleaner technologies and sustainable practices.

Initial investments demand substantial funding, often beyond the capacity of many individual businesses or governments. Moreover, these investments may be too risky for traditional investment, meaning that blended finance options are likely to be needed.

Bridging this divide necessitates collaborative efforts and innovative financing models to mitigate risks and incentivise investments.

Joining private and public actors with philanthropic efforts offers a strategic approach to unlocking the transition to net-zero and restore nature.

The report states that philanthropy, with its nimble and risk-tolerant characteristics, plays a “pivotal role” in providing early-stage funding, catalysing wider investments while securing the most equitable outcomes.

The philanthropic-public-private partnership model uses the collective power of its members to bridge critical financing and knowledge gaps and generates capital structures that expedite a faster transition to sustainability.

Examples of its use are already prominent. Over the past 20 years, more than 50 climate and nature-focused philanthropic-public-private partnerships have surfaced, indicating initial strides in addressing climate-financing hurdles.

Daniel Pacthod, global co-leader at McKinsey Sustainability, said: “Our research aims to support the creation, sustenance and scaling of these partnerships by exploring where to focus their efforts and how to ensure their success.

“We hope it gives them the confidence to partner with others for outsized impact and, crucially, save time in forming partnerships, as it’s time that we can scarcely afford to lose.”