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A clear, universally accepted definition of climate finance is crucial to prevent the overstatement of financial contributions and to ensure clarity on what qualifies as climate finance under the New Collective Quantified Goal on Climate Finance (NCQG).

The agreement of a definition has been highlighted as a critical issue for developing countries, including in their submissions on the issue to the United Nations Framework Convention on Climate Change’s  (UNFCCC) Standing Committee on Finance (SCF), and within NCQG discussions, with the Least Developed Countries Group making it clear that not including a definition under the NCQG is a red line, meaning that they will not accept an NCQG without a definition of climate finance.

If Parties fail to reach agreement on the definition of climate finance, a negative list should instead be provided detailing what should not be counted as climate finance.

The following cheat sheet provides guidance to Parties on what an equitable framework for a definition of climate finance should include as well as a negative list of transactions that should not be counted as climate finance.