By — Sumedha
Abstract:
Climate change, as a raging phenomenon accompanied by deteriorating infrastructure and living warrants change. Be it rampagnt floods in Punjab and Mumbai with drownig infrastucture and human toll or rising extremity of heatwaves in India, countries and the world together as a whole must take on this responsibility of protecting the planet by developing sustainable infrastructure and restructuring building processes. This article argues that climate transition is an essential work in progress that must be undertaken as a shared responsibility between countries as partners looking to address a global crisis. This includes exploring how this shared responsibility is an unequal one and how advantages and disadvantages are distributed disproportionally. This article aims to explore why this inequality must be challenged through themes of debt financing and shared solutions for the same.
Introduction
Climate change is not a distant threat in a far-fetched reality; it is already reshaping our world with extreme weather, dismantling infrastructure, and communities bearing the brunt of broken systems. This not only is resulting in the loss of life and infrastructure it is also slowly but surely melting off the planet. Therefore, the scale of change required to adapt and grow sustainably is immense. This is where climate transition becomes important, where countries globally need to come together and share the responsibility of achieving the goals of net-zero emissions. Established in the Paris Agreement of 2015, where 195 countries came together to officially recognise climate transition plans and set sustainability goals, climate transition is a major work in progress for all these countries. Yet while the responsibility is shared, the burdens and benefits are deeply unequal. From growing debt to GDP ratios to limited access to historic emissions-driving capital, developing nations face systemic disadvantages.
Unequally Shared Responsibility
Climate change is a global crisis requiring global solutions. Emissions in one country intensify storms in another. A collapsed dam or climate-induced outmigration in one region can ripple through trade and security networks worldwide. That’s why climate transition must be a shared responsibility. Yet responsibility and capacity are often distributed unevenly, subject to various intersections. Industrialised nations have historically contributed to the greatest share of emissions, which, ironically, has led them to generate enough capital that they can now invest in both mitigation and adaptation. Meanwhile, emerging markets of developing economies are subject to high external debt, limited access to international capital markets, domestic poverty challenges and a rising debt to GDP ratio that has limited their ability to finance their battle against climate change. These differences create a moral and practical obligation for the developed nations from the Global North to engage in climate financing activities for the global south Countries profiting from the industrial revolution, and benefiting from decades of unsustainable growth, must shoulder a larger share of the transition burden. Otherwise, we risk deepening global inequality for generations to come and never reaching the goals so ambitiously set out under the Paris Agreement of 2015.
Debt Financing: An Emerging Solution
It is abundantly clear that financing sustainable infrastructure is costly. Many of the emerging and developing countries already spend large shares of their revenues repaying previously acquired sovereign debt, which limits the room for further public investment. These vulnerable nations are often stuck in a cycle where climate disasters trigger new loans, which in turn worsen debt burdens. Therefore, it is clear that relying completely on the public sector is unsustainable due to the rising debt ratio that developing countries would have to pay back. However, relying on the private sector as well proves to be infeasible due to the underdevelopment of the private sector in many of these countriesDebt financing in this scenario can come in as a force for good when designed creatively and efficiently.
Concessional loans and grants from multilateral financial institutions can bridge financing gaps without expanding the existing debt. Sovereign Green bonds and climate bonds can attract private capital on favourable terms to fund climate sustainability projects. Climate resilience conditionalities, where investments are tied to sustainability standards, can ensure that financing directly translates into climate-smart outcomes. These bonds can further include ESG compliance requirements under CSR guidelines for corporations and companies. This enables investors to gain confidence in their investments being used for sustainability projects exclusively.
Shared Solutions: The real shared responsibility
Creating climate-resilient infrastructure requires more than just financing; it needs technical capacity and shared innovation. This requires effective global cooperation to lead to an efficient and justified climate transition. Private sector players from both developing and developed parts of the world must be incentivised to engineer and share sustainable building techniques, renewable energy systems, and climate-adaptive design tailored to developing economies. Partnerships through governments and international agencies can result in better planning and efficient work towards achieving climate sustainability goals agreed upon in the Paris Agreement of 2015.
These partnerships can be acted out in various capacities, such as sharing risk mechanisms. This would help developing economies pool their financial resources for climate funding in the preparatory phase for climate disasters themselves. The African Risk Capacity is a great example of this mechanism, where a specialised agency of the African Union helps the government to better respond to climate disasters. The best solution to the problem of debt financing for the climate transition, as iterated in the Global Debt Report of 2025, is the shared cooperation between both public and private sectors to share the burden of funding without overwhelming either of the sectors or expanding the current debt ratio.
Therefore, the need of the hour is for countries globally to unite through inclusivity and finance for the climate transition. This not only guarantees the development of sustainable infrastructure but also paves the way for realistic climate justice and equality..
Conclusion
Climate change spares no one, but its burdens are borne unequally. Building sustainable infrastructure is both urgent and financially expensive. For far too long, developing nations have faced insurmountable and unfair circumstances where they are caught between a web of existing sovereign debt and new climate realities. To rectify this imbalance, climate transition must move from being just a shared responsibility to an equally shared one. Developed countries with advanced economies with their multilateral banks, and the private sector must be the flagbearers for this debt reform. This should also be accompanied by affected developing countries participating in inclusive governance and innovative partnerships. By investing equitably, it does not exclusively result in building roads and power lines; it results in forming hope for the future and communities worldwide. In doing so, climate transition becomes more than a project determined at a conference; it becomes humanity’s collective path forward.
About the Author:
Sumedha is currently a student at OP Jindal Global University in her third year of law school. With a strong interest in social sciences, she is keen to explore topics of intersections of climate and society. She is looking forward to explore and enhance her writing and knowledge on the socio-legal field.
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