The Green Climate Fund (GCF), along with its partners MUFG Bank Ltd. (MUFG) and FinDev Canada, have achieved a major milestone in scaling private investment for adaptation with the USD 600 million first closure of the GAIA Climate Loan Fund.

GAIA will principally provide loans to adaptation projects in markets most severely impacted by, and least equipped to respond to, climate change, helping to bridge the estimated USD 300 billion annual adaptation finance gap in developing countries most vulnerable to climate impacts.

The climate loan fund, co-founded by MUFG, Japan’s largest financial group, and FinDev Canada, Canada’s development finance institution, is anchored by a GCF commitment of up to USD 150 million in first-loss capital.

The fund, managed by Climate Fund Managers (CFM), with delivery support from Pollination, a global advisory firm focused on climate and nature, targets a total size of USD 1.48 billion, with final close anticipated in 2027.

Upon full deployment, GAIA is expected to benefit 19 million people, create over 11,000 permanent jobs, avoid around 30 million tonnes of CO₂ equivalent emissions annually, deliver approximately 700 MW of renewable energy capacity and 36,000 GWh of clean generation annually, and enhance the climate resilience of more than 5,000 km² of natural resources.

Mafalda Duarte, GCF Executive Director, said: “GAIA stands to show that adaptation in the world’s most climate-vulnerable regions can yield returns for global investors and communities facing the harshest impacts of the climate crisis. GCF is committing up to USD 150 million as a first-loss investor to anchor a platform set to mobilise nearly ten times that amount for resilience across Africa, Asia, and Latin America. This first-of-its-kind initiative brings private investment to sectors and geographies long shut out of markets, and it proves that smart public-private design can turn perceived risk into real-world opportunity.”

GAIA marks a new approach to climate finance. It will provide long-term loans to public and quasi-public entities, such as municipalities, development banks, and state-owned utilities, across 19 developing countries. At least 25 per cent of investments will be directed to Least Developed Countries (LDCs) and Small Island Developing States (SIDS).

Around 70 per cent of capital will finance adaptation projects in sectors such as sustainable agriculture, water management, and climate-smart infrastructure, while up to 30 per cent will support mitigation, including renewable energy and low-carbon transport.

GAIA exemplifies GCF’s approach to use concessional finance to de-risk investment, mobilise institutional capital, and accelerate climate-resilient development. Supported by additional grant funding from FinDev Canada, GAIA also includes a Technical Assistance Facility and a Foreign Exchange Facility to strengthen project preparation, enhance ESG performance, and enable local currency lending.

Aligned with GCF’s Private Sector Strategy, GAIA demonstrates how blended finance can unlock large-scale private investment for adaptation. As GAIA begins to fund, GCF’s track record of supporting blended investment with organisations such as Climate Investor One and KawiSafi Ventures, will be critical.

Through partnerships like GAIA, GCF continues to catalyse innovative finance for climate resilience, demonstrating that investing in adaptation is both an environmental necessity and a pathway to sustainable, inclusive growth.