Under Article 4.3 of the UN Framework Convention on Climate Change (UNFCCC), developed countries committed to provide funding for the 'agreed full incremental costs' of climate change in developing countries – meaning the additional costs of transforming business-as-usual fossil-fuel dependent economic growth strategies into low-emission climate-resilient development pathways. 

The Convention, the Kyoto Protocol and follow-up agreements and decisions by the Conference of the Parties (COP) have laid out some of the key principles relevant to the financial interaction between developing and developed countries. Other important principles, which can be instructive for a climate finance governance framework, stem from Parties’ existing human rights obligations or a larger body of environmental law outside of the UNFCCC (such as the Rio Declaration and follow-up outcomes).

While the precise meaning of these principles remains a matter of interpretation and discussion, collectively they can nevertheless serve as normative guidance for a coherent framework by which to assess and compare existing as well as new funding mechanisms and commitments, including under a new universal legally binding global climate agreement concluded in Paris in December 2015 and awaiting ratification. 

This briefing looks at the relevant principles and criteria applicable to the three sequential phases relating to mobilisation, administration and governance, and the disbursement and implementation of climate change funding. Taken together, they offer a guiding framework for climate finance.