The GAIA Climate Loan Fund (GAIA) has completed its first closing with $600m. This fund will be utilised to provide loans primarily for climate adaptation projects in areas that are most severely affected by climate change and are least equipped to respond. The fund aims to reach a total size of $1.48 billion, with a final closing expected in 2027.
Co-founded by MUFG, Japan's largest financial group; FinDev Canada, Canada’s development finance institution; and the Green Climate Fund (GCF), GAIA is managed by Climate Fund Managers (CFM), a climate-focused blended finance investment manager, with delivery supported by Pollination, the global advisory firm focused on climate and nature.
New approach to climate finance
GAIA marks a new approach to climate finance by providing long-term loans to sovereign, sub-sovereign, quasi-sovereign and state-owned entities, including municipalities, development banks and state-owned utilities, across 19 emerging and developing countries.
A minimum of 25% of commitments will be deployed in Least Developed Countries (LDCs) and Small Island Developing States (SIDS), where financing needs are greatest.
At least 70% of capital will be dedicated to climate adaptation — such as sustainable agriculture, water management, ecosystem resilience and climate-smart infrastructure — with up to 30% supporting mitigation, including renewable energy and low-carbon transport.
Upon full deployment, GAIA aims to benefit an estimated 19 million people and create more than 11,000 permanent jobs; avoid ~30 million tonnes of CO₂ equivalent emissions per year, deliver ~700 MW of renewable energy capacity and ~36,000 GWh of clean generation annually, and improve the climate resilience of over 5,000 km² of natural resources.
GAIA uses a blended finance structure that combines public and private investment, with public funding deployed strategically to reduce risk and mobilise private capital.
The facility is structured with a junior tranche funded by concessional partners and a senior tranche for commercial investors, alongside a dedicated FX facility for local currency lending and a parallel Technical Assistance Facility to strengthen project preparation, ESG readiness, performance and impact outcomes.
Cornerstone commitments were secured from MUFG (senior capital), FinDev Canada (senior and junior capital) and the Green Climate Fund (junior capital).
FinDev Canada has also provided additional grant funding for both the FX and TA facilities, while MUFG serves as the origination partner for the fund.
Sustainable development
While climate change is a global challenge, its impacts fall most heavily on developing and emerging economies, where communities often lack the infrastructure and resources to withstand events such as floods, droughts and extreme heat.
Projects that build climate resilience have traditionally relied on public funding, which is constrained by limited budgets and competing priorities, and are often overlooked by commercial investors.
By providing private credit to public and quasi-public entities, GAIA aims to help tackle one of the biggest barriers in the adaptation space: the shortage of financing for infrastructure most exposed to climate risk.
This model proves that blended finance can unlock institutional capital for sectors critical to resilience, creating a pathway for sustainable development where it is needed most.
