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A flooded rice paddy near Motihari in the east Champaran district. This crop will be destroyed by the floodwater, which is deeper than the normal level of water saturation used for rice cultivation. This is in the province of Bihar, which was devastated by the worst floods in living memory, which have submerged thousands of villages and large areas of farmland. This damage to crops will cause huge hardship to the poorest people in the region who depend on seasonal agricultural labour for their survival. In Bihar alone more than 515 people have perished and more than 16 million people have been affected. At least two million people have been displaced and are forced to live outdoors on higher ground. These floods were caused by the sort of extreme weather that scientists have been predicting will become more frequent as a result of global warming. | Location: Moti (Photo by Gideon Mendel for Action Aid/Corbis via Getty Images) Corbis via Getty Images Developing countries sit squarely at the climate fault lines. They are not only exposed to some of the most catastrophic climate risks - from the worst forms of extreme heat and air pollution to widespread flooding and crippling drought - but they are also the least prepared to deal with them. Alarm bells have gone off for years around the urgency for action in the most vulnerable countries, but we’re still dealing with an investment and solutions landscape that is dramatically skewed. The vast majority of funding for climate solutions, as well as technology transfer for climate technology, is still a game dominated by wealthy countries. However, this does not stop climate entrepreneurs in emerging markets from getting to work. In many communities in developing countries, climate entrepreneurs are part of a small nucleus of solutions providers that stand at the frontlines of climate action. Acutely aware of local needs and market dynamics they are adept at navigating climate risks and uncertainties to support and protect their communities. Yet they’re hampered by the traditional hurdles that have held back investment in emerging markets for decades. Whether the risks are real or perceived, commercial investors, technology providers and other key players who could bring important resources tend to steer clear of these countries. And it’s likely that most mainstream investors will continue to overlook emerging markets in the near-term. In this moment philanthropy in particular has a unique and urgent role to play not simply in financing climate entrepreneurship and solutions, but also to fostering vibrant ecosystems that enable innovation. More targeted philanthropy can be catalytic in supporting local climate innovators, but doing so will require a fundamentally new approach to how capital is mobilized and coordinated, as well as where specifically it is allocated, why, and how we measure its impact. The most vulnerable to climate risk It’s a well-covered fact that developing countries are often the most climate-vulnerable ones, but let’s look at what the numbers tell us, both in terms of risks as well as access to solutions. The Climate Finance Vulnerability Index suggests that more than two billion people reside in “red zone” nations where climate hazard risk is high and access to finance is low. Almost all 65 red-zone countries are also low and middle-income nations. Of these countries, 43 of them are in Sub-Saharan Africa. Asia-Pacific’s red zone includes more than 520 million people and was the world’s most disaster-hit region in 2024 - exposed to a combination of weather, climate and water hazards that had dramatic impacts on physical and natural infrastructure as well as human well being. MORE FOR YOU And despite the urgency, climate technology rarely flows easily into developing countries. Over 90% of low-carbon technology (LCT) trade is concentrated among high-income nations and China. This constricts the development of local solutions and widens inequalities in both climate mitigation and adaptation efforts between the wealthiest and poorest nations. And so new clean (climate) tech is seldom deployed at scale in the most vulnerable countries. Myriad reasons slow, and in many cases prevent, the transfer. Technology providers can run into policy uncertainty and high tariffs in these markets. And even if those two factors are addressed, inconsistent regulations can undermine tech transfer and long-term investment. And governments in these countries often have few options for raising funding needed to purchase cutting edge technologies. International climate finance flows to developing countries have grown over the years, but have come at a snail’s pace and are still far below the necessary threshold. In 2022, developed nations provided USD 115.9 billion in climate finance to developing countries, barely breaking the $100 billion annual goal, set by UNFCCC, for the first time. Yet, the High Level Expert Group on Climate Finance estimates that developing countries (excluding China) require $2.7 trillion per year by 2030. Reasons abound for why investors (both climate and other) are hesitant to put their money into developing countries. Usually, there are several intertwined risks. Political instability, frequent regulatory changes, and weak governance create uncertainty and potential disruptions. Currency volatility and restrictions on capital flows can reduce returns and limit investment flexibility. Additionally, these markets tend to have lower liquidity and less reliable data, making it harder to conduct accurate risk assessments. And while many investors may agree that in theory emerging markets have high growth potential, this mixture of risks causes many to stay away. Local climate innovation in developing countries Despite capital scarcity, many developing countries are also home to cases of vibrant climate entrepreneurship. Local founders are tackling mitigation and adaptation challenges across sectors, often with minimal resources. In many ways, climate entrepreneurs in developing countries need the very same resources that their peers in wealthier countries need. Access to financing, customers, talent, lab space, strategic partners, specialized mentorship and coaching are all critical. Yet, these resources are also much harder to come by in emerging markets. And there is a growing pool of entrepreneurship support organizations focusing on climate change as well, in these countries. For example, organizations like Village Capital, New Energy Nexus, Reciprocal, Halcyon, Kinjani, Delta40, Climate Collective, and Catal1.5T among many others all have deep networks and years of track record supporting climate entrepreneurs in lower income countries. They are funded by a mixture of non-profit, public and private sector backers and are also pioneering different training, mentorship and market access programs. In parallel, funds like the Acumen Resilient Agriculture Fund, Radical Fund, Climate Resilient Africa Fund, Catalyst Climate Investment Management, Climate Seeds and the Yield Lab, to name a few have developed deep local footholds to back a range of climate mitigation and adaptation-focused entrepreneurs in emerging markets. Alongside them, large development institutions like GIZ, KFW, the World Bank, International Finance Corporation, the Development Finance Corporation and Asian Development Bank, among others, have all also supported climate entrepreneurship in these markets in various ways over the years. The field is by no means barren, but it is under-populated and in dire need of capital to not simply build local solutions, but to incentivize other funders and also to build out the enabling ecosystems to support climate entrepreneurship. Philanthropy can drive breakthroughs for climate entrepreneurs in developing countries Philanthropy could be a key difference-maker here. Of course, it can play its typical role of providing patient capital for climate entrepreneurs, but it can also be leveraged in other ways - building local ecosystems, empowering talent, reframing the way climate technologies and companies are built in emerging markets and prioritizing overlooked sectors. As a starting point, philanthropy needs to have a testing and experimental mindset. While venture capital funds need to report returns back to their limited partners and governments need to demonstrate that they created jobs and boosted economic growth, philanthropy can at least in theory be more agile and creative, taking on a wider mandate. Ecosystem building and supporting early-stage innovations is by definition risky. Most forms of capital cannot take on this role, so philanthropy is by default the best option. And no matter how keen we are to report back tangible results, we need to acknowledge that many climate innovations as well as the ecosystems that surround them are still at the incipient stages, and need an experimental and patient mindset to blossom. Philanthropy needs to be catalytic, but how we define “catalytic” needs to include more than just moving more and different types of capital into countries. It needs to touch more nodes in the ecosystem, and also build the ecosystem system itself. New company building models: We don’t need just more climate entrepreneurship and innovation in developing countries, but we need it to be targeted at solving the most pressing problems. Purpose-built platforms - venture studios and builder models - can incubate startups with greater intentionality, offering technical capacity, market access, and tailored support that meet local needs. These structures help early-stage innovators acquire the most critical resources and talent needed, while helping to derisk the company building process in doing so. Philanthropy is critical to funding the operating costs of these organizations, especially in the initial stages while their portfolios are still being built. Build fractional leadership networks: As much as more funding is needed to support climate startups in their early stages, matching them with the right talent at the right time can be critical. And there’s no guarantee that this talent is locally available. We need specialized programs that can match seasoned leadership - e.g. fractional CFOs, CMOs, and other C-level executives along with technical experts - who can provide critical guidance, strategic discipline, and credibility, making ventures more investment-ready and sustainable. Philanthropy is well-placed to fund these talent networks and create mechanisms for efficiently placing senior professionals - both from the local market and abroad - with climate startups. Ecosystem enablers and hubs: Climate tech benefits from enabling ecosystems, which often entail complex networks of universities giving birth to ideas, funds financing the development of prototypes, executive talent coming in from the corporate world and policymakers assessing how to incentivize the adoption of climate technologies. We have global examples of technology ecosystems, but often they have taken decades to form. Given the short timeline to act, especially in the most vulnerable geographies, we need to kickstart the ecosystem building process. Create linkages between emerging markets: Most funding, technology and talent transfer in climate tech tends to be concentrated between wealthy countries, but there are opportunities to strengthen ties between emerging markets themselves. Creating networks between regions fosters peer learning, market entry, and collaboration. These cross-border hubs and platforms can at a minimum help with knowledge transfer and showcasing important work being done at the local level, but in the best case scenarios they can also help move resources - financial, talent, technology, etc. between countries. Prioritize adaptation and resilience: Often, adaptation and resilience (A&R) risks are the primary ways in which emerging markets first and foremost experience climate change. Increasing finance, company building and entrepreneurship support for A&R - health, disaster resilience, agriculture, and water - reflects the acute realities on the ground and brings direct benefits to vulnerable communities. Historically, commercial investors have shied away from funding adaptation, again giving philanthropy an opening to take the lead. Champion climate innovation for the most vulnerable The climate crisis is as much a test of global solidarity as it is a rallying call for local ingenuity. There is a rich story of innovation and entrepreneurship happening across emerging markets. We need to get better at telling this story and making sure that it lives on and multiplies. Philanthropy can be instrumental in both telling this narrative and writing its next chapter on how climate tech can scale, thrive, and build resilience in the places that need it most. It is a rare instrument that can help in shifting and expanding not just the investment paradigm, but the way that talent moves and ecosystems are built. The work is already well underway in emerging markets, but if we let traditional barriers prevent the movement of resources into them, we risk losing out on the solutions and market dynamism that will define the green transition and a more resilient world. The road ahead must be marked by smart venture building, vibrant ecosystems, and a relentless focus on resilience. Philanthropy is uniquely positioned to operate across these areas, as well as bring together geographies, sectors, and capital stacks to deliver on the promise of climate innovation in the places where it is needed most. Editorial StandardsReprints & Permissions
