What is climate finance?
Climate finance can be a loan, bond, equity investment, grant, guarantee, or blended package. The defining test is what the capital supports: climate change mitigation, which reduces emissions or increases removals, or adaptation, which reduces harm from physical climate impacts. Keslio's sustainable-financing guide explains the main company financing instruments.
Why does climate finance matter to you?
A lender or investor may ask which expenditures qualify, which eligibility criteria you used, what climate outcome you expect, who approved the projects, and how you will track and report the money. If those records are vague, an eligible project can fail the financing criteria or support an overstated public claim.
How does climate finance work?
- Define whether the money supports mitigation, adaptation, or both, and keep the two outcomes separate.
- Set the rule that makes each amount climate finance, such as a named eligible project, an approved programme, or a financing term tied to a climate result.
- Record the amount, funding source, approval, recipient or project, and any conditions attached to the money.
- Report amounts committed and spent separately from expected and achieved climate results, with the method and supporting records.
What mistakes should you avoid?
- Counting all company borrowing because the business has a climate target.
- Mixing mitigation and adaptation benefits without separate measures.
- Reporting an expected emissions reduction as an achieved result.
- Using the same project expenditure against two outstanding use-of-proceeds instruments.
Is climate finance the same as sustainable finance?
No. Climate finance is limited to mitigation, adaptation, resilience, and directly enabling activities. Sustainable finance can also cover social outcomes, biodiversity, pollution prevention, governance, and other environmental objectives.
What records show that funding supports climate action?
Keep the financing agreement or framework, eligibility criteria, project approvals, invoices, asset register, proceeds ledger, baseline data, calculation notes, and allocation or impact reports. The documents should connect each amount to a named project and a measurable climate outcome.