Integrated Guidance for Climate-Resilient Infrastructure

Based on the review of over 150 existing publications and tools on climate-resilient infrastructure, the following key actions have been identified to support practitioners in integrating climate resilience into infrastructure development in the Funding and Financing phase of the infrastructure lifecycle. These actions are summarized in the table below and grouped by theme. Each action is further elaborated on in this section and references and links to key publication and tools are shared.

View all Themes and Actions

Theme 1: Creating Enabling Frameworks for Resilience-Conscious Financing

This theme focuses on creating the enabling environment that allows financing for resilient infrastructure to scale. Governments and investors may strengthen public policies, common standards, and taxonomies that reward climate-resilient investment and make resilience measures financeable. By scaling dedicated public resources and fostering collaboration across sectors, practitioners can align incentives, reduce uncertainty, and create a consistent framework for channelling capital into resilient infrastructure from the outset.

4.1.1 Strengthen public policies, common standards and taxonomies, and incentives to encourage inclusion of A&R measures into infrastructure projects

Objectives

The objective is to mainstream climate resilience into all financing decisions by creating a set of enabling and incentivising policies, regulations, and requirements, embedding in standards and creating a common understanding through taxonomies. For example, this could include systematically integrating resilience requirements into financing and funding eligibility, introducing targeted incentives such as credit enhancements, or enhancing transparency and sustainability reporting across the investment landscape.

Best Practice

Governments and investors can consider the following four best practices:

• Establish resilience taxonomies. Sustainable finance taxonomies that include resilience criteria, such as the EU Taxonomy, UNDRR, Standard Chartered and KPMG Guide for Adaptation and Resilience Finance^[7], and the CBI Climate Bonds Resilience Taxonomy Methodology (2024)^[8], can be used to define and classify resilient infrastructure to help guide investment decisions. It is best practice to tailor global frameworks to regional and sectorial contexts and specific vulnerabilities such as critical infrastructure dependencies.
• Foster climate-risk reporting and disclosure. Following climate financial disclosure rules helps create transparency and enables consideration of climate resilience in all major investment decisions. This is best achieved by having finance-industry-wide reporting and disclosure standards, such as for investors to include climate risks into due diligence activities (see 2.2).
• Mandate outcome-oriented resilience reporting. There is a documented bias towards tracking inputs and outputs rather than outcomes and impacts of resilience measures (for example, tracking activities, rather than impacts) (See 2022 OECD Adaptation Measurement survey^[9] & OECD Measuring Progress in Adapting to a Changing Climate, 2024)^[10]. It is best practice to require projects and portfolios to define a small set of standardised resilience outcome metrics to be reported over time (for example, number of beneficiaries (direct and indirect), number of early warning systems, assets produced, developed, improved, or strengthened), as supported by several initiatives (for example, by the Adaptation Fund, or UNEP.
• Local empowerment. Sub-national investors have a central role in shaping and providing financing. It is therefore important to build local institutional and technical capacity to invest in and drive local climate-resilient projects.

Process, Tools & Guidance

Develop and Support Climate-Resilient Standards and Taxonomies

Governments and investors may formulate or support the development of standards and taxonomies that define what constitutes a “climate-resilient” infrastructure project. Governments can, for example, update and adopt resilience design codes and develop taxonomies such as the EU Taxonomy and disseminate these across financing institutions and public agencies. Likewise, investors may develop investment taxonomies (see below, UNDRR, Standard Chartered & KPMG Guide for Adaptation and Resilience Finance, 2024), finance industry standards, and use rating systems such as the World Bank’s Resilience Rating System (RRS) as benchmarks for project quality.

Several frameworks and taxonomies can be used and disseminated:

• OECD Climate Adaptation Investment Framework (2024)^[11]
• UNDRR, Standard Chartered & KPMG Guide for Adaptation and Resilience Finance (2024)^[7] – a taxonomy for assessing corporate and sovereign bonds
• CBI Climate Bonds Resilience Taxonomy Methodology (2024)^[8]
• The CFRF Mobilising Adaptation Finance to Build Resilience (2024)^[12] report provides an overview of additional taxonomies and examples of resilience standards.
• The World Bank’s Financing Climate Adaptation & Nature-Based Infrastructure (2025)^[13] includes guidance for aligning taxonomy use with project preparation and investment evaluation.

Set Financing Requirements and Incentives

Governments and investors may track and set resilience goals for resilience-related expenditures and establish financing requirements (for example, for governments: public procurement policies or lending criteria; for investors: portfolio goals for resilience (see 4.1.2) or lending criteria) that link project eligibility to the adoption of climate-resilience standards (OECD Climate Adaptation Investment Framework (CAIF) (2024)^[11], pp. 52.).

Governments may additionally establish time-limited, well-targeted incentives (for example, improved financing conditions, guarantees, or tax credits) that help mobilise private capital towards resilience-enhancing investments (OECD Climate Adaptation Investment Framework (CAIF)^[11] (2024), pp. 52.). Transparent climate disclosure requirements can also ensure that investors have the information needed to evaluate risk-adjusted returns.

Relevant guidelines include:

• World Bank Resilience Rating System (RRS)^[14]
• IFC Environmental and Social Performance Standards^[15] and Equator Principles^[16]

Examples from multilateral (development) banks include:

• ADB (2024)^[17]
• AfDB (2024)^[18], notably the Africa Adaptation Acceleration Program (2021)
• EIB Climate Adaptation Plan (2021)^[19], amongst others

Enforce and Update Policies, Standards, and Taxonomies

Governments and investors can establish monitoring and compliance mechanisms that ensure that no project proceeds without climate-resilience screening. Regular reviews can be used to adapt policies, standards, and taxonomies as new climate science and best practices emerge, keeping policies, standards, and taxonomies both ambitious and implementable (See Cançado and Mullan “Stocktake of Climate-resilient Infrastructure Standards”, 2020)^[20].

Useful reference frameworks include the G20/OECD report on Approaches for Financing and Investment in Climate-Resilient Infrastructure (2024)^[21] as well as the UNDRR, Standard Chartered, KPMG: Guide for Adaptation and Resilience Finance (2024)^[7].

4.1.2 Scale and allocate dedicated resources for climate resilience into government budgets and investment portfolios from the start

Objectives

Integrating climate resilience into financial planning can help close financing gaps, accelerate financing for resilience, and ensure that sufficient resources are allocated for resilience measures throughout the project life cycle. Governments and investors may treat climate resilience as a standard budget component within fiscal and portfolio management processes, and actively earmark funds for adaptation measures.

Best Practices

Governments and investors can consider the following three best practices:

• Budget across the resilience cycle. Planning budgets across the whole resilience cycle, from readiness, and response, to recovery phases can ensure continuity of resilience financing.
• Tie to National Adaptation Plans. Budget allocations should align with National Adaptation Plans (see 1.3.1 in the Policies and Plans phase) and related policies such as sector-specific or regional plans to ensure coherence with defined resilience goals.
• Adopt life cycle cost analysis. Evaluating expenditures based on life cycle costs and benefits helps prevent short-term decisions (for example, for the cheapest bid) that increase long-term vulnerabilities.

Process, Tools & Guidance

Identify Funding Needs in Budget/Portfolio

Based on National Adaptation Plans and targeted resilience outcomes, funding needs and gaps to achieve the desired impacts are estimated. Governments and investors may then allocate funds accordingly and explicitly include climate resilience as a line item in budgets or portfolios to ensure dedicated allocations.

Tools that can be applied for climate budget tagging for public resilience investments include:

• OECD Rio markers methodology^[22]
• G20/OECD report on Approaches for Financing and Investing in Climate-Resilient Infrastructure^[21]
• EU Sustainable Finance Taxonomy^[23]
• UNDP Climate Public Expenditure and Institutional Review (2015)^[24]

Dedicate Funds/Portfolio Investments to Resilience

Setting aside or securing dedicated funds, such as contingency reserves, resilience finance facilities, or dedicated climate funds, can help ensure that critical resilience measures are implemented even under fiscal constraints. Integrating resilience criteria into government budget approval processes or investor portfolio steering mechanisms strengthens accountability and transparency.

Relevant guidance for governments includes:

• UNDP Budgeting for climate change. A guidance note for governments to integrate climate change into budgeting (2021)^[25]
• OECD Infrastructure for a Climate-Resilient Future (2024)^[26]

Guidance for investors includes:

• IIGCC’s Climate Resilience Investment Framework (CRIF) (2025)^[27], which recommends actions for setting an A&R plan and managing a proportion of a portfolio in alignment with an A&R plan
• Examples for eligibility criteria can be found in World Bank’s Resilience Rating System (RRS)^[14].

Integrate Climate Data and Tools into Financing Decisions

Climate data, models, and decision-support tools should be used to guide budgeting and portfolio allocation decisions under different climate scenarios in an evidence-based way.

Examples include the NGFS Scenarios Portal for climate scenario data.

4.1.3 Foster collaboration between public and private sectors to identify common goals

Objectives

Public and private stakeholders may collaborate to align on shared risks, goals, and opportunities for climate resilience. Collaboration can help leverage private resources, innovation, and technical expertise to complement public efforts (see Partnerships for Infrastructure (P4I), 2024)^[28] while ensuring that both sectors work towards mutually beneficial outcomes such as service continuity and community resilience. The goal is also to build local capacities by engaging with and empowering local stakeholders to finance and fund resilient infrastructure, transfer knowledge to strengthen skills, and foster long-term local ownership of resilient infrastructure solutions.

Best Practices

Infrastructure owners and operators, governments and investors can consider the following three best practices

• Consider diverse interests. Recognising the potential of different priorities amongst stakeholders can help align goals. For instance, public agencies might focus more on public welfare and long-term resilience, while private firms tend to have commercial objectives and might have shorter planning horizons. It is a best practice to build trust, look for win-win outcomes, and clarify common objectives early on.
• Robust local data. Access to high-quality, localised climate-risk data and common scenarios supports evidence-based collaboration.
• Continuous dialogue. Ongoing engagement through existing channels, such as roundtables and working groups, potentially established through action 3.1.3 (in the Feasibility and Preparation phase), helps facilitate relationships, cooperation, and communication.

Process, Tools & Guidance

Initiate Engagement

Public-sector leadership can be instrumental in initiating collaboration, for example, through senior champions such as mayors or ministers as knowledge brokers (see C40 Inclusive Community Engagement Playbook (2019)^[29] p. 50). Early involvement of such champions signals commitment and builds momentum amongst stakeholders.

Create Multi-level Collaboration Platforms

Collaboration may be formalised through infrastructure-focused platforms, formal coalitions, or task forces that connect national, regional, and local actors with private sector participants. Such platforms can help coordinate resilience priorities, share information, and co-develop solutions. For instance, a country adaptation investment platform can advance a pipeline of high-quality, NAP-aligned adaptation projects and orchestrate adaptation deals by managing different risk-return expectations & driving alignment among parties. It can also facilitate visibility & deployment of full suite of adaptation finance into a viable adaptation project pipeline. Examples for such a country adaptation investment platform is the InfraAsia Project Portal, a virtual marketplace to facilitate matching of partners and funders for green infrastructure projects.

Examples include:

• OECD Infrastructure Governance/Toolkit (participation, coordination, evidence-informed planning) (2025)^[30]
• PPIAF Stakeholder Identification, Engagement and Empowerment Guidance 7 ^[31]
• IADB Resilient public-private partnerships (2024)^[32]

Identify Joint Priorities and Opportunities

Public and private experts can jointly assess vulnerabilities (see 3.1.1 in the Feasibility and Preparation phase), discuss potential resilience options (for example designing flood protections that benefit both the community and private assets), and co-design partnership models and interventions. Pilot projects or quick wins can demonstrate feasibility and build trust.

Relevant methodologies include IADB Resilient public-private partnerships (2024)^[32] and C40 Inclusive Community Engagement Playbook (2019)^[29].

Include Capacity-Building Activities

Training and knowledge exchange can be embedded into collaboration strategies to enhance local implementation capacity. Examples include workshops, “twinning” arrangements with more advanced municipalities, and joint technical programmes.

Supporting materials include:

• OECD Infrastructure Governance/Toolkit (participation, coordination, evidence-informed planning) (2025)^[30]
• PPIAF Stakeholder Identification, Engagement and Empowerment^[31]
• C40 Inclusive Community Engagement Playbook (2019)^[29] pp.100.

Theme 2: Building Investible Projects

This theme focuses on turning resilient project concepts into credible investment opportunities. It highlights the need to demonstrate a clear business case for resilience investments, supported by robust cost-benefit and ROI analysis, and to bundle projects into coherent portfolios to achieve scale and improve investment appeal. Investors need to integrate resilience into financial, technical, and legal due diligence and may require that resilience considerations be embedded in the project.

4.2.1 Demonstrate a strong business case of A&R investments based on rigorous cost–benefit analysis

Objectives

This action focuses on establishing a clear economic rationale for resilience investments. Demonstrating that the benefits of resilience – such as avoided losses, improved reliability, life cycle savings, and economic, social, or environmental co-benefits, amongst others – outweigh the costs can make projects more attractive to funders and investors. A transparent cost-benefit analysis can help quantify the value and return of investment in resilience measures, strengthen investment cases, and guide funding and financing decisions. In order to optimise the financing structure, it is advised to translate cost-benefit analysis findings into funding requirements, tariff design, and/or insurance options and thus help balance project costs and fiscal impacts.

Best Practices

Infrastructure owners and operators, and designers and technical advisors can consider the following four best practices:

• Incorporate uncertainty. Long-term climate scenarios and uncertainty analyses can be used to assess the robustness and sensitivity of cost–benefit results.
• Quantify full benefits. Assessing the direct benefits of resilience (for example, improved reliability), but also the indirect and co-benefits for the community and natural ecosystem helps finding innovative ways to monetise those (i.e., carbon credits)
• Address data gaps. Limited data on climate risks and project performance can impede rigorous cost-benefit-analysis. Improving access to localised climate risk data and building capacity for economic analysis is therefore essential.
• Use evidence and case studies. Drawing on experience from past projects where resilience measures produced high cost-benefit ratios can validate new investment cases.

Process, Tools & Guidance

Leverage Climate Risk Assessment

Findings from climate-risk assessments conducted in the Feasibility & Preparation phase can be used to quantify potential cost increases and revenue losses under future climate scenarios. This information can form the foundation for detailed cost–benefit analysis (see 3.1.1 in the Feasibility and Preparation phase).

Quantify Costs and Benefits of Resilience Measures

Quantifying the life cycle costs (initial CAPEX, lifetime OPEX) and benefits of resilience measures can help identify viable options. Benefits may include direct benefits (for example, avoided losses, increased reliability), indirect benefits (for example, higher land values near resilient areas), or co-benefits (for example, biodiversity increase and social benefits). Innovative approaches to monetise existing benefits and unlock additional benefits, such as monetising carbon credits or using multi-use spaces, can expand the revenue base of adaptation projects.

• Tools such as the CLIMADA platform allow for comparative analysis of adaptation options.
• IIGCC also outlines an appraisal method to decide between options: Physical Climate Risk Appraisal Methodology (PCRAM) 2.0^[36].
• For sector-specific methodologies, see EIB Economic Appraisal of Investment Projects at the EIB (2023)^[37], and EU/JASPERS Practical Guides (2024)^[38] (link).

Calculate ROI and Make the Investment Case

Calculating ROI for resilience measures under different climate scenarios helps highlight the value-for-money proposition. Sensitivity analyses can capture the effect of uncertainty. To make the investment case, results may be packaged into investor-ready summaries, highlighting value for money of resilience and the co-benefits.

Useful methodologies include the OECD Integrating climate change in infrastructure project appraisal (2023)^[39]. For sector-specific methodologies and guidelines, see, for instance,

• EU/JASPERS Practical Guides (2024) (transport, energy, waste)^[38]
• PIEVC Protocol (Engineers Canada, now global)^[40]. (link).
• PIANC WG178 (Ports & Waterways)^[41] (link).

4.2.2 Scale projects and bundle-in coherent portfolios and project pipelines to increase investment attractiveness

Objectives

Bundling multiple small or related projects into a larger programme or pipeline can create economies of scale and learning effects (see Canadian Climate Institute, 2023)^[44],  reduce transaction costs, and improve investment attractiveness. Grouping projects can also support systemic resilience by addressing interconnected vulnerabilities across regions or sectors and can diversify risks across investment portfolios. Through bundling, common resilient standards are set, which leads to consistent, verifiable, and more bankable resilience benefits.

Best Practices

Infrastructure owners and operators, and designers and technical advisors can consider the following four best practices:

• Project alignment. Bundled projects should be carefully selected for compatibility in timeline, type, and risk profile. Misaligned projects (for example, different procurement schedules or highly varied risk levels) can complicate portfolio management.
• Diversify risks within the bundle. Bundling projects also allows for the diversification of risks at the “bundle-level” by including a mix of project types or regions. This reduces the chance of large simultaneous losses triggered by one single event. Note: simply bundling multiple infrastructure projects together does not automatically make the financing safer if all those projects are exposed to the same hazard (such as flooding, seismic events, or windstorms) or are in the same region.
• Balance scale with complexity. While bundling can increase efficiency, governance and coordination challenges may grow due to additional complexity and cascading impacts. For example, a delay, cost overrun, or failure in one area of the programme triggers additional consequences in other areas.
• Manage complexity. Managing a bundled portfolio requires strong coordination amongst multiple stakeholders (for example, various local authorities, communities, funders). There can be institutional and legal challenges in bundling (different jurisdictions’ procurement rules or regulatory approvals) that should be navigated early.

Process, Tools & Guidance

Develop Project Pipelines and Programmes

Moving from isolated projects to a programme or pipeline approach can improve funding efficiency. These pipelines should be developed around common goals – such as flood protection or resilient transport corridors – in order to align public and private priorities (See CDRI Financing for Disaster- and Climate-Resilient Infrastructure (2023)^[45]

Resources include the CDRI Financing for Disaster- and Climate-Resilient Infrastructure (2023)^[45].

Standardise Preparation and Documentation

Owners can use standardised templates for project preparation, procurement, and contracts, which tends to reduce transaction costs and accelerate investor due diligence (see section 4.2.3). Standardisation also helps apply portfolio-level guarantees or insurance instruments.

Reference frameworks include the FAST-Infra initiative, which offers a Sustainable Infrastructure Label for signalling high sustainability standards, and FAST-Infra Platform, which specifically supports the bundling and preparation of large-scale sustainable infrastructure programmes.

Aggregate Funding Sources

Combining funding sources, such as concessional finance, grants, or commercial investment, can improve portfolio viability and reduce financing gaps. Blended approaches can also cross-subsidise resilience projects that have high public value but limited direct returns (see Canadian Climate Institute, 2023)^[44].

Guidance is provided by CDRI Financing for Disaster- and Climate-Resilient Infrastructure (2023)^[45].

4.2.3 Integrate climate resilience in financial, technical, and legal due diligence

Objectives

This action focuses on ensuring that climate risks and resilience measures are fully integrated into investors’ due diligence across financial, technical, and legal dimensions. The goal is to safeguard the long-term viability of assets and revenue streams (OECD, 2024)^[26] while aligning with emerging disclosure and taxonomy requirements (for example, EU Taxonomy, CBRT) and Paris Alignment commitments.

Note: Investors come into the project at several stages during its life cycle. The outlined action to integrate climate risks into the performed due diligence analyses can be performed at any stage a due diligence is conducted.

Best Practices

Investors can consider the following six best practices:

• Stress-test assumptions: Project models should be stress-tested for climate shocks and disruptions and embed contingencies, reserves, or insurance in the financing plan.
• Use scenario analysis. Applying NGFS and TCFD-aligned climate scenarios can reveal vulnerabilities of the financial models under multiple futures. See CFRF (2024)^[12] for “ABC approach” to how investors may choose scenarios.
• Incorporate adaptation impacts. Including adaptation costs and benefits in financial appraisals leads to improved accuracy.
• Integrate resilience criteria. Making climate resilience part of investment-approval processes ensures consistency.

• Activist investment approach. Investors can influence existing assets they are financing through engagement, active ownership, and stewardship.
• Portfolio perspective. Conducting due diligence at the asset level while managing resilience and climate risks at the portfolio level enables balanced decision-making (see IIGCC, 2025^[27]; CDRI Financing for Disaster- and Climate-Resilient Infrastructure, 2023)^[45].

Process, Tools & Guidance

Conduct Thorough Climate Due Diligence

Investors can perform in-depth assessments of climate risks across the project life cycle and stress-test financial assumptions, cost-benefit analyses, and risk allocation under different climate scenarios. Due diligence may also test for maladaptation.

Useful tools and guidelines for the assessment of climate risks can be found in the Feasibility and Preparation phase (see 3.1.1)

Additional investor-specific tools include:

• ESG Due Diligence Tool by GRESB and B Capital Partners AG (excel-based open-source tool tailored for infrastructure assets; for more information see also GRESB and B Capital Partners AG release open source ESG due diligence tool for Infrastructure Assets – GRESB, 2020)^[46]
• OECD Managing Climate Risks and Impacts Through Due Diligence for Responsible Business Conduct (2023)^[47]
• CFRF Mobilising adaptation finance to build resilience (2024)^[12] for choosing climate data and scenarios
• IIGCC’s Climate Resilience Investment Framework (CRIF) (2025)^[27] that recommends actions for strategic portfolio allocation

Take Legal and Contractual Measures

Incorporating climate resilience clauses into contracts such as adaptation covenants or specific force majeure definitions can clarify responsibilities and accountability. Investors may track the implementation of the resilience measures (see OECD Managing Climate Risks and Impacts Through Due Diligence for Responsible Business Conduct, 2023)^[47].

Guidelines that are useful in this step include CBI Climate Bonds Resilience Taxonomy Methodology (2024)^[48], IFC Environmental and Social Performance Standards^[15] and Equator Principles^[16], as well as tools mentioned in section 3.1.1 (in the Feasibility and Preparation phase).

Insurance Due Diligence

During due diligence, it is recommended to engage insurers or advisors early on to evaluate climate-related insurability of the project and to require and support adequate insurance (for example, cat bonds). For further information, see section 4.3.3.

Theme 3: Leveraging Financing Instruments and Innovation

This theme addresses how to select tailored financing and funding instruments and structures, including innovative financing instruments and blended structures that share risks and returns more effectively. By using a diverse toolbox (such as resilience bonds, guarantees, and adaptation funds), tailored to local and sectoral contexts, practitioners can unlock new (commercial) capital sources and ensure that resilience becomes a mainstream investment priority.

4.3.1 Develop allocation model of risks, returns, and benefits between public and private sectors

Objectives

It is important that risks, returns, and benefits are distributed transparently and efficiently amongst stakeholders. Aligning each risk with the party best able and willing to manage it can increase efficiency (see IADB, Donadi et al., 2024)^[49], attract private investment, and protect public value. Efficient risk allocation and fair risk-return distribution are key to a project being financeable with an attractive risk–return profile.

Best Practices

Infrastructure owners and operators, investors, and designers and technical advisors can consider the following four best practices:

• Integrate climate uncertainty. Scenario analysis can help test whether risk allocations remain robust under different climate futures. To achieve higher accuracy, it is advised to update traditional risk categories to reflect climate change.
• Systemic and long-term view. Considering cascading sectoral risks can improve overall resilience, as climate events can trigger knock-on impacts across sectors (for example flood damaging transport and power) and might therefore complicate risk-sharing.
• Clear contractual terms. Explicit risk, benefit, and return allocation and transparent risk-sharing clauses reduce disputes and ambiguity. One example would be to refine the force majeure definition to distinguish manageable climate events from truly unforeseeable ones.
• Continuous review. Regular updates to risk allocations can maintain balance over time, particularly as project conditions change or new information emerges.

Process, Tools & Guidance

Gather Information About Risks, Returns, and Benefits

Allocation models can be informed by risk, return, and benefit data from feasibility and due diligence assessments (see 3.1.1, 3.2.1 in the Feasibility and Preparation phase and 4.2.1).

Mapping Stakeholder Objectives

Outlining stakeholders’ goals, needs, and constraints, such as risk capacity and expected return, helps to support transparent negotiation. For example, governments may prioritise service reliability and affordability, while private investors require an adequate return for any risk taken.

References include PPIAF (PPP Risk Allocation Tool)^[50].

Develop a Risk Allocation Matrix

Using standardised PPP risk-allocation templates (for example, as showcased in GCA, 2025^[51] – Box 4.2 Climate risk allocation matrix) can help in assigning risks logically between public and private actors. Benchmarking allocations against comparable projects supports fairness and market acceptance. The process can be iterative; for example, if the private sector’s risk exposure is too high for a given return, public risk-sharing mechanisms might be considered. Conversely, leaving manageable risks with the public sector should be avoided, as doing so could erode value for money. It is best practice to strive for an arrangement in which the private partner manages risks proactively (for example, through KPI-linked payments, see tool 3.7 in IADB Resilient public-private partnerships, 2024)^[49] and the public partner retains only those risks it can handle more efficiently.

Relevant resources stem mostly from the literature on PPPs and include:

• PPIAF PPP Risk Allocation Tool^[50]
• World Bank Climate Toolkits for Infrastructure PPPs^[52]
• UNECE Draft Guidelines on promoting climate resilient Public-Private Partnerships (2025)^[53]
• IADB Resilient public-private partnerships (2024)^[49]

4.3.2 Select from a diverse toolbox of sustainable financing instruments, tailored to regional needs and different types of funding streams

Objectives

The aim of this action is to mobilise diverse sources of capital for resilient infrastructure. By tailoring the selection of financing instruments to regional conditions and project types, governments and investors can close resilience finance gaps, enhance bankability of resilience measures, and ultimately protect long-term investment value (see OECD Improving the Landscape for Sustainable Infrastructure Financing, 2023)^[54]. Resilience projects and measures often face a bankability gap due to perceived low ROI, high risk, and mismatch between global finance models and local conditions. Adequate financing instruments also support resilient reconstruction, as they increase financial capacities to manage the impacts of climate hazards and establish mechanisms to encourage resilient recovery, such as “build back better” initiatives. For example, the UK’s Flood Re programme’s Build Back Better initiative will reimburse up to GBP 10 000 beyond the cost of a standard repair to fund resilience measures (OECD, 2024)^[11]. (Also see Action 1.3.3 “build back better.” in the Policies and Plans phase)

Best Practices

Infrastructure owners and operators, investors, and designers and technical advisors can consider the following four best practices:

• Tailor financing. An appropriate mix of instruments (for example, grants, loans, PPPs, bonds) that fits local market conditions, regulatory frameworks, and development priorities can increase flexibility.
• Align with certification standards. Certifications can help projects signal their alignment with ESG and climate resilience best practices to attract impact investors. New frameworks are being piloted to standardise what “resilient infrastructure” means for investors, for example:
  • The FAST-Infra initiative offers a Sustainable Infrastructure Label for signalling high sustainability standards.
  • Blue Dot Network certification includes an element on climate change and disaster resilience (see Element 4).
  • Climate Bonds Standard^[55] is framework developed by the Climate Bond Initiative.
• Bring insurers to the table. Involving insurance providers early can help (co-)design risk-transfer instruments.
• Outcome-oriented reporting. Including outcome and impact metrics in financial reporting can improve transparency and accountability (see for example, Adaptation Fund, UNEP).

Process, Tools & Guidance

Assess Financing Gap and Determine Available Resources

Thorough assessments of financing needs, policy or market failures, and available funding sources can guide the selection of instruments.

References include G20/OECD Policy Toolkit for Quality Infrastructure Investment (2023)^[56] and the practical guideline by UZH Initiative for Blended Finance When to use which instrument? (2021)^[57].

Determine Available Resources

It is important to understand and determine eligibility and requirements for those climate-resilient finance instruments that might be used for the specific project (see deep dive on instrument landscape).

Examples of possible requirements can be found in taxonomies such as:

• CBI Climate Bonds Standard^[55]
• CBI Climate Bonds Resilience Taxonomy^[8]
• ICMA Green Bond Principles (2025)^[58]

Select Appropriate Instruments and Engage Stakeholders

Financing strategies often combine multiple instruments, such as public funding for high upfront costs or non-revenue components and private finance for income-generating ones. Collaboration with local financial institutions and green banks can help adapt global instruments to local realities.

Guidance is provided in:

• UNDRR Guide for Adaptation and Resilience Finance (2024)^[7]
• G20/OECD Policy Toolkit for Quality Infrastructure Investment (2023)^[56]
• NAP Global Network Inventory of Innovative Financial Instruments for Climate Change Adaptation^[59]
• OECD DAC Blended Finance Guidance (2025)^[60]

Engage Local and Regional Stakeholders

It is important to also work closely with local financial institutions, governments, and communities to design financing solutions and build capacities. Local banks/investors can be important partners, as they often have specific knowledge of local market conditions, and collaboration can be facilitated via co-financing or green credit lines (for methodology and resources, see section 4.1.3).

4.3.3 Design and apply appropriate (blended) finance structures to finance climate-resilient projects

Objectives

This action focuses on using public or concessional finance as a catalyst to attract/crowd-in larger volumes of private capital for resilient infrastructure (see, for example, ICSI Case Study on Climate Investor Two)^[62].  Blended finance can bridge market gaps, accelerate innovation, and scale up investment when structured transparently and efficiently. For efficiency, it is important to minimise concessionally while maximising mobilisation and integrity.

Best Practices

Infrastructure owners and operators, investors, and designers and technical advisors can consider the following five best practices:

• Common understanding. There is “considerable divergence in views about how blended finance should be defined, implemented, and ultimately evaluated” according to NGSF (2023)^[63]. It is recommended that stakeholders therefore reach a common understanding of scope and structure of blended finance early on, such as by considering the tools and guidelines mentioned in this action.
• Prevent moral hazard. Aligning incentives with resilience outcomes avoids risk-transfer misuse and moral hazard. In other words, risk transfers should not disincentivise risk reduction. For example, it is best practice to link insurance coverage or premium discounts to the implementation of resilience measures.
• Avoid crowding out. Ensuring blended finance complements, not replaces, private investment, and can sustain long-term market development (OECD, 2025)^[60].
• Set fair risk allocation. Traditional blended finance contracts treat most natural disasters as force majeure, with governments implicitly carrying the cost. Best practice is to allocate risks fairly and transparently for foreseeable climate risks to the parties best able to manage them (see section 4.3.1).
• Build capacity. Governments are advised to invest in training their infrastructure planners, PPP analysts, and procurement officers on climate resilience tools and concepts to design climate-resilient PPPs.

Process, Tools & Guidance

Diagnose Needs and Barriers

Projects can be analysed to understand why they may not attract private finance under commercial terms (see 3.2.1 in the Feasibility and Preparation phase). Market barriers, such as low cash flows or currency risks, can be addressed through targeted concessional measures. Especially in emerging markets, it is advised to also consider ecosystem factors, such as political/economic stability, currency risks, and local financing capacity.

Relevant sources include the World Bank Financing Climate Adaptation and Nature-Based Infrastructure (2025)^[13].

Structure a Layered Capital Stack

While the stack needs to be tailored to the specific project and fund purpose, investor risk appetite, and asset risk (see tools and guidelines), an example structure includes the following:

• Commercial capital (senior loans, bonds, equity) on top
• Public or concessional capital in mezzanine tranches to absorb first losses and improve senior credit quality
• Guarantees or political risk insurance to cover default or disaster risks (from MDBs, MIGA, national DFIs)
• Grants or technical assistance to cover adaptation features that have no direct revenue stream (for example, flood barriers, early warning systems)

Guidance on how to structure the finance stack can be found here:

• OECD DAC Blended Finance Guidance 2025^[60]
• G20/OECD report on approaches for financing and investment in climate-resilient infrastructure (2024)^[21]
• UNDRR, Standard Chartered, KPMG: Guide for Adaptation and Resilience Finance (2024)^[7]
• UZH Initiative for Blended Finance When to use which instrument? (2021)^[57]

BII & BCG Scaling Blended Finance: Practical tools for Blended Finance Fund design (2025)^[64] outlines the process in detail, including the following:

• A typology of five archetypal fund structures (A–E) that match fund purpose, investor risk appetite, and asset risk (see BII & BCG, 2025^[64], p.10)
• A scorecard to test a structure across three dimensions: rationale, structure & waterfall, and stakeholder alignment (see BII & BCG, 2025^[64], p.25)