Change Initiative Highlight Climate Debt Trap Risks for Bangladesh and LDCs

In a groundbreaking report titled “Equity and Justice in Climate Finance: Climate Debt Trap Risks for Bangladesh and Other LDCs" , Change Initiative (CI), in partnership with the Institute of Strategy and Tactics Research (ISTR) , has revealed the alarming trend of climate finance pushing Bangladesh and other Least Developed Countries (LDCs) into a debt trap. The report highlights how these countries, which contribute minimally to global emissions, are being burdened by unsustainable debt, hampering their ability to address the escalating impacts of climate change.

The report’s findings were discussed during a national dialogue hosted by CI on October 20, 2024, at the CIRDAP CICC Venue in Dhaka. The event, organized by ISTR’s Bangladesh Programme partner, brought together policymakers, donor agencies, civil society representatives, and climate finance experts to address the urgent need for reforming the global climate finance landscape. The dialogue stressed the need to move away from loan-based financing and called for a shift toward grant-based climate finance to prevent LDCs from falling into deepening financial distress.

In his keynote address, M. Zakir Hossain Khan, Chief Executive of Change Initiative, emphasized the interconnectedness of the global climate crisis, stating:

"Climate change knows no borders. The suffering of farmers in Bangladesh mirrors that of farmers in India. We must prioritize sustainable action to safeguard natural rights and confront these global challenges together."

Khan also proposed critical recommendations, urging the adoption of grant-based adaptation finance by 2025 and the implementation of debt cancellation mechanisms and innovative tools like ‘debt-for-climate swaps’ to free up resources for climate action in LDCs. He noted that by 2030, LDCs will require $480 billion annually for climate adaptation alone.

The event’s Chief Guest, Syeda Rizwana Hasan, Honorable Adviser to the Ministry of Environment, Forest and Climate Change, underscored the importance of climate justice and equity in global finance, saying:

"Climate finance must be about justice and equity, not just funds. We must ensure that resources reach the most vulnerable and empower them to build resilience. The ultra-capitalistic model of financing is deeply flawed. We need alternative approaches that prioritize human survival over profit."

Hasan also highlighted the critical role of youth in the fight for climate justice, stating:

"Young people are at the forefront of demanding climate justice. We must empower them to lead nature-based solutions and ensure they don’t fall into corporate traps."

The report reveals staggering statistics, including a threefold increase in Bangladesh’s multilateral per capita climate debt, reaching $2.04, compared to other climate-vulnerable LDCs. Moreover, only 30.74% of pledged international climate funds have been disbursed to these nations, leaving them unable to meet the urgent adaptation and mitigation needs.

Key recommendations discussed at the dialogue include:

- Increasing grant-based international climate finance, ensuring that LDCs have the resources to tackle climate challenges without increasing their debt burden.

- Implementing debt relief mechanisms for countries trapped by climate-related loans.

- Reforming multilateral financial institutions to offer more favorable financing terms to LDCs.

- Enhancing transparency and accountability in the flow of climate finance.

- Promoting innovative solutions like climate resilience bonds and debt-for-climate swaps.

The event, presided over by Dr. S.M. Munjurul Hannan Khan, Executive Director of NACOM, also featured distinguished speakers from UNDP, WFP, BRAC, The World Bank, and Transparency International Bangladesh (TIB), among others.

The report’s findings and the dialogue underscore the urgency for immediate international action to reform the global climate finance system, ensuring it aligns with the needs of LDCs to combat climate change effectively, without plunging them into deeper economic instability.