Climate Funds and Social Protection: What is the progress to date?

The 21st century has witnessed a profound transformation in our understanding of the climate crisis and its far-reaching impacts. As the world grapples with the consequences of global warming, it has become increasingly clear that addressing climate change is not merely an environmental challenge but a complex socio-economic issue that requires innovative solutions. According to a report by the Intergovernmental Panel on Climate Change (2023), there have been changes in the atmosphere, cryosphere, biosphere and ocean leading to loss and damage to people and nature. Historically, vulnerable communities who have contributed the least to climate change are facing the brunt of its negative impacts. One of the critical aspects of this challenge is the need for social protection measures that can safeguard vulnerable populations from the adverse effects of climate change.

Climate finance for social protection has emerged as an area of crucial consideration, to bridge the gap between climate action and social well-being. Climate funds, which are primarily designed to support mitigation and adaptation efforts, could be reimagined to simultaneously strengthen social safety nets, enhance resilience and promote sustainable development. Initiating this paradigm shift reflects the growing recognition that climate change disproportionately affects marginalized and economically disadvantaged communities, exacerbating existing inequalities.

This paper delves into the evolving landscape of climate finance for social protection. It gives an overview of current social protection spending, financing and coverage gaps across the world, and explores how climate finance can strengthen social protection systems, build resilience and improve socio-economic outcomes. The brief then zooms into adaptation funds (climate funds focused on enhancing the adaptive capacities of communities) to understand what kinds of social protection-related projects are being funded. An analysis following this was conducted to identify to what extent adaptation funds have been used for social protection or social protection type projects.

The social protection projects identified do not link directly to strengthening or leveraging the national social protection system. However, social protection objectives are applied, specifically to reduce poverty and vulnerability, through cash and in-kind transfers and labour market policies. Major emerging themes include enhancing access to credit and technical assistance for local and smallholder farmers. Additionally, active labour market policies were engaged in the projects identified through objectives to foster entrepreneurship and the creation of green jobs and businesses.