1. Pillars
  2. Delivering on the capital stack
  3. Innovative sources of concessional and non-debt finance

Innovative sources of concessional and non-debt finance

Innovative sources of concessional and non-debt finance can widen climate financing beyond traditional public commitments. Ideas that have gained momentum are rechanneled special drawing rights (SDRs), which have potential to support affordable longer-term lending, and global solidarity levies, which could generate new, predictable revenues, along with philanthropy that offers flexible grants and catalytic capital. Progress across these three sources is uneven: SDR lending is operational, philanthropic funding is growing, while proposed levies have yet to deliver international climate-finance revenues.

Status

These non-depth mechanisms offer an uncertain supplement to core concessional funding; if operationalized at scale, they could potentially expand access to finance while creating additional fiscal space, but uptake has been uneven and challenged by the current financial system. Philanthropic giving, the most established of the non-dept approaches, is growing yet remains small compared with needs and is unevenly distributed, although it is noted for its adaptation funding. SDRs are currently delivered primarily through the IMF’s resilience and sustainability trust (RST) and could provide affordable financing, although its funding beyond 2028 is uncertain and MDB rechanneling proposals have stalled. Global solidarity levies offer prospective non-debt revenues, but proposed shipping and aviation mechanisms remain unimplemented. Shared constraints include across all three approaches include insufficient resources for vulnerable recipients, limited evidence of additional investment mobilized, and weak measurement of realized climate and development benefits.

Scale

Magnitude relative to the need

Slow

The potential of the three non-debt instruments far exceeds current delivery. By June 2026, USD 49 billion equivalent had been channeled to the IMF's Resilience and Sustainability Trust (RST), although only USD 9 billion had been disbursed (IMF, 2026i). By 2035, studies suggest that global solidarity levies could yield USD 20–110 billion per year for external climate finance, but proposed mechanisms have no documented revenues (Bhattacharya et al., 2025). Philanthropic mitigation funding reached an estimated USD 11.7–18.4 billion in 2024, equivalent to approximately 2.1% of total philanthropic giving (Esmaeili et al., 2026).

Speed

Pace of reform against what's needed

Slow

Implementation rates differ sharply across the instruments. Philanthropic funding is generally speedier, and foundation mitigation funding more than doubled between 2020 and 2024 (Esmaeili et al., 2026). The IMF's RST, established in 2022, had financing arrangements approved for 29 countries by mid-2026, but SDR transfers through the proposed multilateral development bank (MDB) channel have not occurred (IMF, 2026i; IMF, 2026j). Solidarity levy coalitions are advancing without operational receipts: adoption of the IMO Net-Zero Framework was delayed, and the Premium Flyers initiative has yet to collect revenue (Gabbatiss and Lempriere, 2026; GSLTF, 2026a).

Reach

How far it extends across countries and institutions

Slow

Reach remains constrained, particularly for EMDEs, and the potential reach exceeds realized access across all three approaches. Current RST arrangements extend to 29 countries, including 19 countries eligible for the IMF's Poverty Reduction and Growth Trust, but parallel program requirements and access limits exclude other markets (IMF, 2026i). EMDEs receive only around 30% of foundation climate funding, despite expanded partnerships supporting locally led solutions (Esmaeili et al., 2026; ClimateWorks, 2024). Solidarity levy proposals aim to benefit climate-vulnerable countries, but international revenue-sharing arrangements and recipient coverage remain undecided (GSLTF, 2025).

The Path Forward

Implementation of innovative and non-debt instruments should prioritize accessible, measurable finance without displacing grants. If SDRs are to be used as an accessible and viable means of climate finance, the IMF and participating countries should secure RST resources beyond 2028, improve program flexibility, and address reserve-asset barriers to SDR rechanneling through MDBs. Governments and coalitions should coordinate to consider implementing feasible solidarity levies with transparent, equitable international revenue-sharing. Philanthropic funders should broaden support for adaptation, locally led solutions, and catalytic investment in underserved markets. Across all three channels, reporting should clarify recipients, financing terms, the additional capital mobilized and realized climate and development outcomes.

Related Action Areas