Circular Fashion in India: Why Sustainability Still Comes at a Premium

India sits at the heart of the global textile economy. From cotton farms in Maharashtra to spinning mills in Tamil Nadu and garment factories supplying brands across Europe and the United States, the country is both a manufacturing powerhouse and a fast-growing consumer market. Yet India is also staring at a mounting textile waste problem, one that our current linear model of “make, wear, discard” is ill-equipped to handle.

In theory, circularity promises a textile system where clothes last longer, are reused and repaired, and eventually recycled back into new fibres. However, in practice, India’s journey towards circular textiles reveals a hard truth: sustainable choices still cost more, and the burden of that premium is unevenly shared.

Design first, recycling later

If circular fashion has one clear lesson, it is that recycling cannot fix bad design. Too many garments today are made with complex fibre blends, cheap trims and chemical finishes that make reuse and recycling nearly impossible. For India, where the textile and apparel sector contributes about 2.3% of India’s GDP, this matters enormously.

Designing clothes that last longer and can be easily repaired or recycled is not just an environmental issue, it is an industrial strategy. Better design reduces waste, lowers material losses and creates products with higher long-term value. Yet design decisions are often driven by international buyers demanding low prices and rapid turnaround times, leaving little room for durability or recyclability. If India is serious about circularity, design standards must move up the agenda, not only for exports but also for the domestic market, where fast fashion consumption is rising rapidly.

Ironically, some of the most circular practices already exist in India. Repairing clothes, passing them on, or repurposing old textiles has long been embedded in everyday life. Tailors, repair shops, and informal resale markets together form a vast, decentralised circular economy that operates with minimal waste and maximum value retention. The LiFE (Lifestyle for Environment) Mission seeks to institutionalise and scale these practices by promoting conscious consumption, reuse, and resource efficiency as national priorities. By aligning traditional circular behaviours with LiFE’s behavioural-change framework, India has a unique opportunity to bridge informal ingenuity with formal policy, strengthening circularity while preserving livelihoods and reducing the environmental footprint of the textile sector.

Yet these systems are rarely recognised or supported in formal policy or brand strategies. Instead of building on this advantage, India risks replacing it with a Western-style disposable fashion culture. Strengthening repair services, resale platforms, and quality standards could extend garment life at far lower cost and environmental impact than most recycling technologies.

The missing backbone: collection and sorting

Where India struggles most is in what happens after clothes are discarded. Collection systems for post-consumer textiles are fragmented, informal and poorly documented. Valuable material is often mixed, damaged or exported without traceability.

Advanced recycling technologies, particularly chemical recycling, demand clean, well-sorted feedstock. Without investment in collection, sorting and traceability infrastructure, these technologies cannot scale. Digital product tags and automated sorting facilities are often discussed, but deployment remains limited. This gap explains why India, despite its manufacturing scale, risks being locked out of higher-value recycling pathways unless public and private investment accelerates.

Perhaps the most difficult issue for India’s textile sector is this: recycled fibres often cost more than virgin materials. Mechanical recycling produces lower-quality fibres that are suitable only for limited applications. Chemical recycling can produce near-virgin quality polyester or cellulosics, but it is capital-intensive, energy-hungry and still developing[1]. According to a news article published in the Times of India, in major cities of Indian, like Hyderabad, 750–800 tonnes of discarded clothing are collected daily, but about 40% of this could theoretically be recycled; without proper segregation, most ends up in landfills.

As a result, recycled textiles frequently carry a price premium. Brands may promote sustainability in marketing campaigns, but many remain reluctant to absorb higher material costs. The burden often shifts to suppliers, who already operate on thin margins, or to consumers, who may not be willing to pay more. For a price-sensitive market such as India, this creates a real dilemma. If circular textiles remain a premium product, circularity risks becoming a niche rather than a systemic solution.

This is where government intervention becomes critical. Expecting the market alone to deliver affordable circular textiles is unrealistic. Policies such as extended producer responsibility, minimum recycled-content mandates and green public procurement can help create stable demand and reduce price volatility. According to IMARC Groups, the textile recycling market in India was valued at around USD 328 million in 2024 and is projected to grow, reaching approximately USD 427 million by 2033 as sustainable practices gain traction.

India’s waste management rules serve as a starting point, but recent discussions by the Ministry of Textiles on ESG in textiles underscore the importance of enforcement and clarity. Without strong ESG-aligned policy signals, investments in recycling remain risky and recycled fibres struggle against cheaper virgin alternatives. There is also a growing concern about confusing activity with impact, not all recycling is environmentally beneficial if it is energy-intensive or chemically hazardous. Embedding life-cycle assessment within ESG frameworks is essential to ensure circular solutions genuinely reduce emissions, water use, and pollution rather than shifting impacts elsewhere.

This matters particularly for India, where environmental burdens and social costs are often borne by vulnerable communities. Circularity cannot succeed if it ignores labour conditions in recycling chains or displaces informal workers without alternatives.

A pragmatic path forward

India does not need to leap straight into high-tech solutions. The most effective pathway is a layered one. Start with better design, strengthen reuse and repair, build robust collection systems, and deploy recycling technologies where they make economic and environmental sense.

Above all, India must confront the pricing question head-on. Circular textiles will not scale if recycled fibres remain a luxury. Closing that gap requires coordinated action from brands, policymakers and investors, and a willingness to accept that sustainability, at least initially, costs money.

The real question is not whether India can afford circular textiles; it is whether it can afford the long-term costs of staying linear?

(Views expressed are the author’s own and do not reflect those of ICRIER)

[1] Juanga-Labayen, J. P., Labayen, I. V., & Yuan, Q. (2022). A Review on Textile Recycling Practices and Challenges. Textiles, 2(1), 174-188. https://doi.org/10.3390/textiles2010010

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Sub-National Disaster Finance: Missed Opportunities and Challenges

Two thousand villages uprooted, 43 lives lost, and thousands of people displaced in Punjab in recent floods is not an anomaly, but a recurrent catastrophe. Recent years have been marked by a cascade of climate hazards, revealing a nationwide pattern of escalating climate risks and mounting damages. The statistics reveal a glaring reality: human proclivities and the pursuit of high growth have left the planet vulnerable, altering the planet’s radiative forcing and straining its natural resources. This has exacerbated the intensity, severity, and frequency of natural hazards, resulting in socio-economic damages and losses. Keeping in line with the dynamic characteristics of climate change, the 15th Finance Commission’s disaster finance recommendations provide a systematic suite of guidelines to mitigate and recover from the climate change-induced disasters.

The report astonishingly diverges from its successive commissions by introducing a new methodology to allocate disaster funds based on a state’s capacity, risk exposure, and vulnerability. The commission has also suggested maintaining mitigation funds aimed at avoiding losses and damages both at the national and state levels, along with response funds, to support preparedness, mitigation, and recovery efforts. Mitigation, within the scope of the document, has been referred to as all the measures taken to avoid the damages before the disaster, differing from its conventional and broader meaning in mainstream climate discourse. Additionally, it has also proposed exploring market-based risk management tools and alternative funding sources to strengthen disaster financing.

This marks a tremendous shift from previous reports and covers a broad spectrum of climate risks and associated relief measures, supporting the concerted efforts to acknowledge the loss and damages emanating from climate risks. However, it still continues to prioritise post-disaster relief over pre-disaster resilience. For instance, from the corpus dedicated to disaster management at both the state and national level, 20% has been earmarked for avoiding damages, while the rest has been allocated to the response fund comprising response and relief, recovery and reconstruction, and capacity building funds. This highlights that India is still stuck in a “pay after damage” model rather than a “prevention is better than cure” model. The uncertainty of disasters and the quantum of damages they leave in their wake, preventive measures such as climate proofing existing infrastructure, establishing monitoring and warning systems, and deploying climate resilient technologies are not mere fancy environmental luxuries, but essential safeguards. However, these measures require huge upfront costs, making the current allocation grossly inadequate.

Despite Section 2 (i) of the Disaster Management Act defining mitigation practices involving developing coastal walls, flood embankments, etc, the role of nature-based solutions still remains grossly under-invested. The recommendations call for allocating funds to support the relocation of affected communities located in floodplains, coasts, and hills. While suggested in good faith, this overlooks the sizeable financial commitments involved to build resettlements, in conjunction with it being socially disruptive. In contrast, the Finance Commission argues that these projects should not be funded from the mitigation fund. Whereas, a forward-looking plan should argue and include the costs within the mitigation funds to finance these projects, if not fully then partially, that reduce the damages significantly, instead of making relocation a default action and leaving the state government to cut expenses from its regular budgets to make the deployment of these projects economically viable.

In addition, the report recommends expanding the state-specific allocation to 25% from 10%. This could have been done with the view that damages like landslides, floods, and heatwaves are largely local in nature and need certain flexibility from the state government to address them. However, the increase in allocation may not be fiscally prudent and may put immense pressure on public budgets without the scope for diversifying funding sources. Given damages induced from climate change form public goods, this leaves primarily the state with a huge responsibility to mitigate it, supported by the central government whenever necessary. There is a need to mobilise funds from sources other than public streams, such as blended finance, bonds, risk pools, catastrophe (CAT) bonds, parametric insurance and corporate investments, to increase private players’ participation. After all, the aftermaths of climate change do not discriminate and affect everyone.

In this vein, the recommendations also touch upon making insurance available to raise funds, recognising the rapid growth of the sector and the pivotal role that it can play to ease fiscal burden. The recommendation expands on including four broad facets, such as disaster-related death insurance, crop insurance, a national risk pool for protecting and restoring infrastructure, and international parametric insurance. However, this recognition is in stark contrast to the reality. Most households and businesses have minimal to no coverage against climate-related losses. The report merely lays down the role that insurance can play without building a foundational mechanism to expand coverage, such as a premium support and risk-sharing framework to make the tool operational, missing a critical opportunity. Despite meaningful deliberations on this aspect, without concrete guidelines, the government will continue to shoulder compensation costs post each disaster.

Photo by Ravi Roshan on Pexels.com

The shift in the 2020-21 report to a more balanced methodology, including mixing fiscal capacity, risk exposure, and disaster risk index, is a welcome and strategic correction. Moreover, its continuation for 2021-26 reflects a much-needed acknowledgement that climate vulnerability, not historical expenditures, should drive the allocations of the funds. By incorporating risk exposure and disaster risk, the Commission lays a foundation for a more equitable and needs-responsive financing and allocation system. Incorporating these elements to determine climate vulnerability is essential for understanding future risks and informing studies that employ downscale climate data to identify and estimate parameters that shape how climate hazards manifest and impact the local economies. Deliberations on instruments such as insurance to share risks and expand financial resources are both proactive and practical.

Increasing the share of state-specific allocations and calling for exploring market-based instruments is also welcomed as an aspirational move. However, in an era of intensifying climate change that will repeatedly lead to severe losses, incremental improvements are not enough. There is an urgent need for a proactive, forward-looking disaster finance system that prioritises reducing risks before the disaster strikes.

(Views expressed are the author’s own and do not reflect those of ICRIER)

Climate Resilience in India: Why Community Leadership Matters

In the present landscape of climate change, the intersection between climate resilience and economic sustainability has become a crucial focus for community-building initiatives. While actions by the government remain essential for large-scale support and development, community practices are arguably more important in building real resilience for several reasons. Local communities stand on the front lines of climate impacts. They possess indigenous knowledge shaped by their unique environmental conditions, allowing them to develop solutions that are practical, affordable, and deeply rooted in local needs. As India advances its adaptation efforts, community-centric approaches have emerged as one of the central pillars because their actions are grounded in local realities. What becomes increasingly clear is that strong climate resilience in India depends on recognizing communities as key partners in planning and implementation. When people at the grassroots are provided with the right information, tools, and support systems, they can build solutions that are not only environmentally sound but also socially and economically meaningful. Strengthening local participation, improving access to technical knowledge, and encouraging collaboration across villages and districts can make climate action far more effective and long-lasting.

Across India, communities are already facing the ripple effects of climate-induced catastrophes, cyclones, floods, droughts, and extreme heat, which severely affect agriculture-dependent and resource-scarce regions. These local communities are usually the first to experience these impacts and the first to respond. For millions of marginalized households, these shocks translate into crop losses, unstable incomes, food insecurity, and migration. This makes climate-resilient agriculture a necessity rather than a choice. Many communities have started adopting diversified cropping systems, improving soil health through organic inputs, restoring traditional seed varieties, and integrating water-efficient practices such as drip irrigation and rainwater harvesting. Furthermore, to mitigate crop damage from recurring cyclones and subsequent saline inundation, farmers in Odisha’s coastal areas are able to revive saline-resistant paddy seeds to cope with the issue. This has been achieved by the collaborative efforts made by the local farmer initiatives and scientific support. Alongside, in Maharashtra’s Marathwada region, local watershed groups have revived rivers, streams, and village tanks through collective labor, improving groundwater recharge and strengthening agricultural productivity. These types of practical interventions have been demonstrating the efficiency of merging local expertise with tangible actions.

Furthermore, a notable example of community innovation in the agricultural sector is the growing adoption of village-level biogas plants. Many villages in Haryana, Karnataka, and Gujarat have set up community biogas units that use cattle dung and agricultural waste to produce clean cooking fuel. The nutrient-rich slurry that remains after gas production serves as an excellent organic fertilizer, reducing dependence on chemical inputs and helping restore soil health as well as water retention. This, in turn, making agriculture more resilient to climate change impacts like drought. These biogas initiatives illustrate how rural communities can build climate resilience while strengthening local economies. In parallel, community-led disaster preparedness also highlights the strength of local participation. In coastal and flood-prone regions, trained village volunteers and local committees play a crucial role in early warning communication, evacuation support, and relief coordination. Odisha’s cyclone-prone districts offer strong examples, where community groups work alongside disaster response teams to ensure timely preparation. In Assam, village flood committees monitor river levels during the monsoon and help families secure essentials before water rises. These systems rely heavily on trust and collective responsibility qualities that are easier to build at the community level than through external structures alone. However, in India, there are several top-down planning structures ranging from national (National Action Plan on Climate Change (NAPCC), other national schemes on agriculture, water, disaster management, etc.) and state climate policies to departmental schemes which are designed using broad datasets and uniform guidelines which often overlook insights and lived experiences of local communities. Summing up, the community-led initiatives taken across different sectors to build climate resilience clearly demonstrate their pivotal role. There is a fundamental need to bridge the gap between local, grassroots efforts and formal, top-down policy and planning structures.

As India advances on its path toward stronger climate resilience, creating an enabling environment where local voices, knowledge systems, and community priorities on-ground action becomes necessary. Climate impacts are deeply context-specific drought patterns in Bundelkhand differ from flood vulnerabilities in Assam or coastal risks in Odisha, hence solutions must be anchored in local realities. Community-led initiatives offer this granularity. They can identify emerging risks early, mobilize people rapidly, and design context-driven responses that top-down planning structures often overlook. However, to scale-up these efforts consciously, there is a need for supportive institutional frameworks and recognition within formal planning processes. Strengthening communities through long-term capacity-building, training programmes, awareness initiatives, and access to technical guidance can significantly enhance adaptation outcomes. Local groups often provide the first signals of climate shifts changes in crop behavior, water availability, or seasonal unpredictability which can help refine larger climate strategies.

National and state policies must therefore create pathways that formally integrate community-generated insights into district and state climate plans. Clear processes for incorporating community climate action plans, participatory vulnerability assessments, and locally developed adaptation practices can help bridge the gap between ground realities and institutional decision-making. Additionally, structured platforms for knowledge exchange across villages, districts, and states can help replicate successful grassroots models such as community-driven watershed management, local biodiversity restoration, or village committees managing bio-gas plants for cleaner energy in agriculture.

(Views expressed are the authors’ own and don’t necessarily reflect those of ICRIER)

Resilience as a Development Imperative: Taking Stock of India’s Industrial Preparedness

As climate extremes intensify and infrastructure systems around the world face unprecedented stress, the global community is grappling with a stark reality that resilience is no longer optional rather an urgent imperative. International frameworks such as the 2030 Sustainable Development Agenda, as well as the Sendai Framework for Disaster Risk Reduction, both acknowledge the urgency of improving the resiliency of global infrastructure. Despite 2025 marking the 10th Anniversary of their adoption, progress with respect to the targets has been modest. According to the United Nations Sustainable Development Goals 2024 Report, only 17 percent of the targets appear to be on track, with poor infrastructure resilience, financing gaps, and governance challenges being identified as major barriers. Similarly, the midterm review of the Sendai Framework highlights that there has been slow progress with respect to Target D, which aims to “significantly cut disaster-related losses to critical infrastructure and interruptions to essential services by 2030”. In particular, parties have reported that between 2015 and 2023, an average of 92,199 critical infrastructure assets have been damaged annually, with more than 1.6 million basic service facilities being disrupted.

The recent COP30 deliberations witnessed the release of CDRI’s flagship report on Global Infrastructure Resilience, which underscores the importance of three types of capacities, namely, to absorb shock, to respond and to recover from disasters. It highlights that indirect losses resulting from service disruptions of electricity, water supply, etc, are 7.4 times greater than direct damages to infrastructure. The report introduced the concept of resilience dividend, i.e., the range of benefits resulting from investment in infrastructure resilience, including but not limited to avoided asset losses, reduced disruption in services, improved quality and reliability of public services and so on. In fact, over the life span of infrastructure assets, the resilience dividend has generally outweighed the quantum of additional investment required. According to the results of an extensive survey of businesses conducted by CDRI, spread across 60 countries, it was found that 77 percent feel that government policies for reliance are either absent or are inadequately enforced. Additionally, while 87 percent of the surveyed firms have insurance, about 42 percent have only partial coverage for asset and revenue losses.

man in reflective vest working in ruins after earthquake
Photo by Seyfettin Geçit on Pexels.com

The fact that climate-related risks have both direct (physical damage to assets such as plants, equipment, etc.) and indirect (supply chain disruptions, hindrances to logistics, etc.) impacts on industries is well documented. Given their central role as drivers of economic growth, ensuring the resilience of the manufacturing sector to withstand climate shocks is critical. While one key aspect is to assess the risk and exposure, the other is to identify and implement strategies to fortify against potential climate-induced damage. Unfortunately, industrial resiliency planning in India remains at a nascent stage. A recent ICRIER study involving loss and damage estimation for the states of Odisha (cyclone) and Assam (flood) found anecdotal evidence that supports this claim. For instance, the aftermath of Cyclone Fani in Odisha, resulted in the industrial plants suffering extensive damage to buildings, machinery, and inventories, with losses reaching 10-25 percent of productive capital and, in some cases, going as high as 75 percent. However, industry respondents covered as part of a parallel ground truthing survey, claimed that insurance coverage was minimal, forcing them to fall back on savings or borrowing. Businesses also faced prolonged operational disruptions due to power outages, Information and Communication Technology (ICT) network failures, damaged infrastructure, and delays in raw material supply, with recovery periods ranging from a few weeks to several months. In Assam, even units not directly impacted by floods suffered monsoon-related moisture damage to raw materials and inventories, especially in water-sensitive sectors such as cement, coke, and perishable goods. Thus, even though floods and cyclones are annual occurrences for these states, the measures adopted by them to deal with the same are largely rudimentary. For instance, pre-season cleaning of stormwater drains, installing heavy-duty gates to prevent water from entering factory premises, etc. Persistent issues such as partial insurance, delayed claims, inadequate asset coverage, and repeated seasonal disruptions highlight that industrial resilience remains largely reactive and unplanned, underscoring the need for a more structured approach. But if repeated losses can’t move the needle on preparedness, it begs the question, what will?

One possible way around this is for planning to move from a voluntary practice to a mandated requirement, ensuring that firms adhere to some pre-identified standards. Such a measure would not only help assess current resilience levels but would also serve as a basis for prioritising funding flows, incentivising risk-reducing investments, and monitoring progress over time. This framework could be operationalised through a mandatory disclosure mechanism. A useful precedent is the Environment, Social and Governance (ESG) reporting requirement introduced by the Securities and Exchange Board of India (SEBI), which now mandates the top 1,000 listed companies by market capitalisation to report under the Business Responsibility and Sustainability Reporting (BRSR) framework. It encourages firms to report on environmental risks and/or opportunities they face and the various mitigation or adaptation measures they have adopted to manage the same. Parallely, the Reserve Bank of India (RBI) is also in the process of formalising the disclosure framework on climate-related financial risks that aims to improve transparency and strengthen the sectors’ ability to identify, assess, and manage risks associated with climate change. Taken together, the evolving reporting architecture reflects an institutional shift towards embedding climate impacts into planning and decision-making.

In conclusion, having established the need for financial resources for resiliency building and having identified avenues of potential beneficiaries of such funds, the next obvious step is to ascertain how these resources should be allocated. For meaningful impact, this would require breaking away from reactionary ad-hoc interventions towards a systematic evidence-based approach that prioritises measures with demonstrable resilience gains. As the country’s regulatory landscape moves towards greater transparency with the forthcoming RBI climate-risk disclosures, there is merit in riding the momentum to develop a resiliency framework for industries. One that is bolstered by sectoral benchmarks and resilience assessments to ensure that climate-induced shocks do not derail long-term growth trajectories.

(Views expressed are authors’ own and don’t reflect those of ICRIER)

Measuring What the Roadmap Misses: Exposure Indices and the New Infrastructure of Climate Finance

The Baku to Belem Roadmap to 1.3T is about mobilising and directing climate finance, yet it says relatively little about how the underlying climate risks are to be measured, compared and fed into economic decision-making. For countries already grappling with rising debt, tightening fiscal space and escalating climate impacts, this is no longer a technical issue, it is also central to both their ability to plan and their leverage in climate finance negotiations.

The report does acknowledge the role of exposure indices and other related metrics but treats them largely as supporting diagnostics. In practice, they need to be understood as core infrastructure for the climate finance system. Without credible, country developed metrics that show how climate hazards are affecting growth, sectoral output and public finances, demands for adaptation finance, loss & damage support remain vulnerable to being dismissed as “aspirational”. With such metrics, especially when grounded in transparent methodologies, these demands can be reframed as responses to quantifiable risks.

Recent work by ICRIER on Estimating the Future Cost of Adaptation for India provides useful illustration of climate risk measurement. The study develops exposure indices for five key climate stresses, namely rainfall variability, floods, droughts, heat stress and sea level rise using national observational data and climate projections. These indices, scaled between zero and one, capture how exposed the country is to each hazard. They are then used to weight sector-wise damage functions drawn from the literature, producing estimates of how much climate change is already shaving off GDP and how this might evolve under different scenarios. Further, it is not enough to measure today’s exposure, countries will increasingly need regularly updated exposure indices linked to standard climate scenarios, so that future trajectories of risk can be built into fiscal planning and long-term investment decisions.

Exposure indices combine long-term climate variables (rainfall patterns, temperature extremes, sea-level trends) with information on who and what (people, land, infrastructure, ecosystems) gets exposed. Flood indices, for example, can blend the share of land inundated with the proportion of population affected, drought indices can draw on precipitation anomalies over several decades, heat indices can capture both the frequency of “heat days” and the intensity of maximum temperatures, and sea-level exposure can integrate coastal elevation and population density. This is directly relevant to the growing ecosystem of climate-related financial sector methodologies. As more climate-related financial sector methodologies are being developed, from stress testing to integration of climate scenarios into macroeconomic modelling and budget forecasts, countries with the least capacities will benefit from institutionalised international collaboration and peer-learning networks, recognising existing challenges such as lack of standardised and quality data resulting in underestimation and only partial measurement of climate-related risks. If these tools evolve without a parallel investment in exposure metrics and data systems, there is a risk that they will function primarily as compliance exercises imposed from outside, rather than as instruments vulnerable countries can use to strengthen their own negotiating position.

At the same time, taking exposure indices seriously exposes just how demanding this agenda is. Even in relatively data-rich settings, constructing robust indices requires long, consistent climate time series data that is harmonised across multiple agencies, high-quality socio-economic and sectoral data at sub-national level, and enough empirical work to link climate variables to outcomes such as labour productivity, health, ecosystem services etc. Many low-income countries are still struggling with basic data gaps for rainfall, temperature, land use or coastal elevation, and their national statistical systems are already stretched thin. Expecting them to match the analytical standards implied by stress-testing and scenario-based fiscal planning, without targeted support, risks deepening existing asymmetries in the climate finance system.

This is precisely where the Roadmap could have been more forward-looking. Rather than a generic call for better vulnerability metrics, it could have recognised climate risk analytics, including exposure indices, as a global public good that requires its own financing and governance arrangements. The emerging GIRI model can be seen as a promising first step in building this kind of shared infrastructure for climate risk measurement, but it will need to be complemented by sustained investment in country-owned data systems and analytics. An ambitious extension of the Baku to Belem agenda would propose an international facility for climate risk measurement and modelling, with three concrete pillars: grant-based support for data collection and statistical capacity in vulnerable countries; open-source toolkits for building exposure indices and embedding them in macro-fiscal and financial models, and structured peer-learning platforms where countries can adapt and improve these tools in practice.

Multilateral development banks and UN agencies would also need to adjust their role. Beyond project finance and policy lending, they could be mandated to co-develop and adopt standards for climate risk measurement, aligning their own risk assessments and country strategies with nationally generated exposure metrics wherever possible. Over time, such convergence could help reduce the current fragmentation of approaches, and limit the space for opaque modelling choices that systematically understate the risks faced by climate-vulnerable states.

Ultimately, this is about credibility as much as capacity. A climate finance architecture that claims to mobilise trillions, but continues to operate with only a partial view of the risks it is addressing, will struggle to convince that resources are being directed where they are most needed. Bringing exposure indices and related climate risk measurement tools into the centre of the Baku to Belem agenda would signal a shift from ad hoc, narrative-based justifications towards a more disciplined, evidence-based approach to needs and priorities. It is not a substitute for the hard political choices on revenue sources or instruments, but it is a necessary complement without which even the most ambitious Roadmap risks remaining a statement of intent rather than a guide to action.

(Views expressed are the author’s own and do not reflect those of ICRIER)