In a stark indictment of the global climate finance system, Bangladesh – a nation on the frontlines of climate catastrophe despite its minimal contribution to global emissions – is sinking deeper into a “climate debt trap,” according to a groundbreaking new report. The Climate Debt Risk Index (CDRI-2025), unveiled by the Dhaka-based think tank Change Initiative, paints a grim picture: Bangladesh’s risk score stands at 65.37 out of 100, categorizing it as “High” risk, with projections showing a slight uptick to 65.63 by 2031. This places the country among the most indebted climate-vulnerable nations, burdened by a per-capita climate debt of USD 79.61 – nearly four times the average for Least Developed Countries (LDCs).
The report, developed by Change Initiative’s research team under the leadership of M. Zakir Hossain Khan and presented by co-researchers including Tonmay Saha, exposes how promises of reparative finance under the Paris Agreement have morphed into a cycle of loans that exacerbate poverty and undermine resilience. “Bangladesh contributes less than 0.5% of global emissions, yet we’re paying a heavy price – not just in lives and livelihoods lost to disasters, but in mounting debt that siphons resources from essential services,” Khan said during the report’s launch in Dhaka on September 20.
A Debt-Dominated System: Loans Over Grants
At the heart of the crisis is the overwhelming reliance on loans in climate finance. Over 70% of funds flowing to vulnerable countries like Bangladesh arrive as debt, forcing them to repay what was intended as aid. The CDRI-2025 highlights Bangladesh’s Debt-to-Grant ratio at 2.7, almost quadruple the LDC average of 0.7. Even more alarming is the Multilateral Climate Funds’ debt-to-grant ratio of 0.94 – nearly five times the LDC benchmark of 0.19.
This imbalance has dire consequences for adaptation efforts, which are critical for a delta nation like Bangladesh, prone to cyclones, floods, and rising sea levels. The report’s Adaptation-to-Mitigation ratio for Bangladesh is a mere 0.42, less than half the LDC average of 0.88, meaning funds are disproportionately skewed toward mitigation projects like emissions reduction, often at the expense of life-saving measures such as flood barriers or resilient agriculture.
Between 2000 and 2023, climate hazards have displaced or affected over 130 million Bangladeshis, inflicting USD 13.6 billion in economic losses. Yet, households are left to fend for themselves, spending an average of BDT 10,700 (approximately USD 88) annually on private protection measures – totaling a staggering USD 1.7 billion nationwide each year. “This is the hidden cost of inaction,” noted Dr. Fazle Rabbi Sadeque Ahmed, Deputy Managing Director of the Palli Karma-Sahayak Foundation (PKSF). “Adaptation finance must be grant-based and equitable, or the world risks a climate debt crisis where survival becomes unaffordable for the vulnerable and destabilizing for all.”
Sectoral Imbalances and the ‘Misattribution Scandal’
The index delves into sectoral disparities, revealing how certain industries gobble up funds while others starve. Energy sectors absorb over half of climate finance but are heavily debt-driven, with a loan-to-grant ratio of 11.99:1. Transport and storage are almost entirely loan-based (1123:1), and water supply – despite its adaptation focus – carries a 7.78:1 ratio. Meanwhile, agriculture, disaster preparedness, health, and industry receive paltry sums relative to their risks.
Adding insult to injury is what the report dubs a “misattribution scandal”: 18.84% of Bangladesh’s reported climate finance has been funneled into fossil fuel projects, mislabeled as climate-friendly. These flows come with a punishing loan-to-grant ratio of 28.8, artificially inflating the country’s debt burden and eroding trust in the system. “For every ton of CO2e emission, Bangladesh is compelled to take a loan of USD 29.52 – a clear injustice as per the ‘Polluters Pay Principle,'” the report states.
Dr. A. K. Enamul Haque, Director General of the Bangladesh Institute of Development Studies (BIDS), emphasized the broader implications: “Climate is science, yet Bangladesh remains deeply vulnerable. Grants are limited, loans risky, and overreliance on the private sector heightens financial strain. Vulnerable communities face added threats like trafficking. True resilience demands local knowledge, technology, and systemic change – incremental fixes are not enough.”
Global Context: A Widespread Violation of Principles
The CDRI-2025 isn’t just a spotlight on Bangladesh; it analyzes 55 countries, finding 13 at “Very High” risk, 34 at “High” risk, and only 8 at “Moderate/Low” risk. Across LDCs, over 70% of climate finance is loan-based, flouting the Paris Agreement’s polluter-pays ethos and the International Court of Justice’s (ICJ) 2025 ruling on climate reparations.
Faria Hossain Ikra, Greenspeaker for Greenpeace South East Asia, tied this to Bangladesh’s impending LDC graduation: “As Bangladesh prepares to graduate from LDC status, accessing just and fair climate finance will become even harder. We must explore how the ICJ’s advisory opinion can serve as a legal tool to hold major emitters accountable and mobilize the support we are owed.”
A full international release, including country profiles and comparative metrics, is slated for COP30, where advocates hope it will galvanize calls for reform.
Voices from the Frontlines: Calls for Accountability and Reform
The report’s launch drew pointed commentary from policymakers, diplomats, and activists. Dr. Farhina Ahmed, Secretary of the Ministry of Environment, Forest and Climate Change, urged integration of biodiversity protection: “Protecting biodiversity can reduce climate impacts, yet global forums like COP often fail to deliver results, leaving communities vulnerable. Bangladesh must respond by addressing unequal carbon emissions, as highlighted by the ICJ judgment, while prioritizing public-private action, national adaptation plans, and NDC implementation.”
Nayoka Martinez-Bäckström, First Secretary and Deputy Head of Development Cooperation at the Embassy of Sweden in Dhaka, stressed impact over rhetoric: “Climate finance must be accountable, just, and impactful – protecting resources and ensuring a fair transition. Beyond grants, new financing sources are vital. Tools like the Climate Vulnerability Index and inclusive budgeting can guide allocation, but what matters most is real community impact.”
Shirin Lira, Cooperation Officer at the Embassy of Switzerland, highlighted governance: “Unless Bangladesh ensures accountability, transparency, and good governance so climate funds reach the most vulnerable, access to global finance will remain limited. Policies alone are not enough – during disasters, local communities are the first responders, and without building their capacity, international pledges will not deliver real action.”
Dr. Saimun Parvez, Special Assistant to the Chairperson of the Bangladesh Nationalist Party (BNP), called for a paradigm shift: “Bangladesh contributes little to global emissions yet suffers the greatest impacts. Climate finance must shift from loans to equity and justice, with transparency, accountability, and real support for adaptation. From nature-based solutions and waterway restoration to renewables and climate-smart agriculture, action must be backed by expertise, national commitment, and global solidarity. The era of climate debt must end; the era of climate justice must begin.”
Dr. Kazi Shahjahan, Joint Secretary of the Economic Relations Division, noted the multifaceted challenge: “Climate science is intertwined with politics, economics, and human behavior; to effectively mobilize finance, we must navigate national and international policies, learn from global development frameworks, and build local capacity to utilize data and resources strategically.”
Khan himself warned of unfulfilled promises: “Without firm pledges and clear governance, the $1B Climate Finance Action Fund, launched in COP29, risks remaining an ambition, not a lifeline for vulnerable nations.”
Charting a Path Forward: Natural Rights Led Governance
Amid the doom, the report proposes a “Pathway towards Just Climate Finance” rooted in Natural Rights Led Governance (NRLG) – an approach that views climate finance as an obligation to uphold the rights of people and ecosystems to thrive. Key priorities include:
- Grant-first finance: At least 70% of adaptation and 100% of loss-and-damage funds as grants; concessional debt only for high-return projects.
- Debt exits and swaps: Cancel climate-induced debts and expand debt-for-nature swaps linked to ecosystem restoration.
- Direct local access: Simplify funding for municipalities and communities, bolstering monitoring and fiduciary systems.
- MDB reform: Multilateral Development Banks should prioritize grants, adaptation, and end fossil fuel mislabeling.
- Earth Solidarity Fund: A global grant mechanism funded by carbon pricing and levies for unconditional resilience support.
- National reform: Evolve the Bangladesh Climate Change Trust Fund into the Bangladesh Natural Rights Fund (BNRF) for rights-based allocation, incorporating domestic pollution taxes.
Without these changes, the report warns, Bangladesh’s fiscal space will shrink, crowding out social spending and amplifying disaster lethality. As the world eyes COP30, this index serves as a urgent call: climate finance must evolve from a burden into a true tool for justice, or nations like Bangladesh will pay the ultimate price.
