Adaptation finance gap
The difference between the estimated cost of adaptation in developing countries and the adaptation finance actually flowing to them; UNEP puts it at USD 284-339 billion a year to 2035.
Additionality
The principle that development finance should enable outcomes or investment that would not have happened without it, rather than displacing commercial capital.
Baku to Belém Roadmap to 1.3T
A process launched under the NCQG decision, led by the COP29 and COP30 Presidencies, on how to scale climate finance to developing countries to at least USD 1.3 trillion a year by 2035.
Basis risk
The mismatch between index payouts and actual losses: an adverse event with no payout (adverse basis risk) or a payout with no adverse event (positive basis risk), as framed by the IAIS.
Biennial Assessment (BA)
The Standing Committee on Finance’s two-yearly report on climate finance flows, definitions and methods under the UNFCCC; the sixth edition covers flows to 2022.
Blended finance
The strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries (OECD).
Catastrophe bond
A security whose principal is at risk: investors receive a coupon and are repaid at maturity unless a specified disaster meets the trigger, in which case the collateral pays the sponsor.
Climate finance
Finance that aims at reducing emissions and enhancing sinks of greenhouse gases and at reducing vulnerability and increasing the resilience of human and ecological systems to negative climate change impacts (UNFCCC SCF).
Concessional finance
Finance provided on terms more generous than the market, such as below-market rates, longer tenors or junior positions, used in blended structures to make a transaction viable for commercial investors.
Contingent credit
A loan agreed before a disaster that can be drawn quickly once a pre-specified trigger, such as a declared state of emergency, is met.
Dependency on nature
The reliance of a business or economic activity on ecosystem services, such as water supply, pollination, soil quality or flood protection.
Disaster risk finance (DRF)
Pre-arranged financial strategies and instruments that give governments, firms and households timely access to funds after a disaster, combining instruments for events of different frequency and severity.
Ecosystem services
The benefits people and businesses obtain from ecosystems; IPBES reports declines in 14 of 18 categories of nature’s contributions to people.
Expected loss
The modelled average annual loss of principal to investors, expressed as a percentage of the bond’s size; used with the spread to price the risk.
First-loss capital
The most junior position in a capital structure, which absorbs losses before other investors; often provided by donors or philanthropies in blended funds.
IFRS Practice Statement
Non-mandatory ISSB guidance; companies need not comply with it to state compliance with ISSB Standards. The ISSB proposed its nature-related disclosures in this form in October 2026.
Impact on nature
A change in the state of nature caused by an organisation’s activities, such as land-use change, pollution or resource extraction, which can be positive or negative.
Indemnity trigger
A trigger based on the sponsor’s actual losses from the covered event, which minimises basis risk for the sponsor but takes longer to settle.
Industry loss index trigger
A trigger based on estimated insured losses for the whole market from an event, rather than the sponsor’s own losses.
Insurance-linked securities (ILS)
Securities whose returns depend on insurance risk, including catastrophe bonds, sidecars and collateralised reinsurance.
LEAP approach
The TNFD’s integrated assessment process for identifying and assessing nature-related issues: Locate the interface with nature, Evaluate dependencies and impacts, Assess risks and opportunities, Prepare to respond and report.
Mitigation finance
Climate finance directed at reducing greenhouse gas emissions or enhancing sinks, such as renewable energy, clean transport and efficient buildings.
Mobilisation ratio
The amount of commercial or private finance mobilised per unit of concessional or public finance; Convergence reported USD 5.33 of commercial finance per concessional dollar in 2025.
Modelled-loss trigger
A trigger that feeds hazard data into a catastrophe model to estimate losses and pays according to the estimated, not the actual, loss.
Nature-related risks
Potential threats posed to an organisation that arise from its and wider society’s dependencies and impacts on nature; they can be physical, transition or systemic risks (TNFD).
New collective quantified goal (NCQG)
The climate finance goal set at COP29 in Baku: at least USD 300 billion a year by 2035 for developing countries, with developed countries taking the lead, alongside a call to scale finance from all sources to at least USD 1.3 trillion a year.
Parametric insurance
Insurance in which a claim is defined by reference to a pre-determined index, such as rainfall or wind speed, and paid when the index crosses an agreed threshold, rather than by assessing each loss.
People-affected trigger
A trigger based on the number of people reported affected by an event, used for example in SEADRIF’s 2025 policy for Lao PDR and PCRIC’s policy for Vanuatu.
Pre-arranged finance
Money whose amount, trigger and delivery are agreed before a shock, so that it can be disbursed quickly and predictably when the shock occurs.
Protection gap
The share of economic losses from disasters that is not covered by insurance or other pre-arranged finance and so falls on households, firms and public budgets.
Risk layering
Combining instruments so that cheaper sources of money cover frequent, low-severity losses and more expensive risk transfer is used only for rare, severe events (World Bank).
Sovereign catastrophe risk pool
A facility owned or used by a group of governments to buy parametric cover together, diversifying risk and accessing reinsurance on better terms; examples include CCRIF, ARC, PCRIC and SEADRIF.
Special purpose vehicle (SPV)
A separate legal entity that sells reinsurance or insurance to the sponsor, issues the bonds to investors and holds the proceeds as collateral.
TNFD Adopter
An organisation that has publicly committed to start reporting in line with the TNFD recommendations; there were 802 by July 2026.