Down to earth

BRICS poised to accelerate the green transition with greater South-South cooperation for tangible climate outcomes

The BRICS countries are united by the collective goal of combating climate change. As BRICS membership has expanded, so has the potential for the BRICS countries to contribute to the global green transition. This is especially true regarding climate finance and technology, where the BRICS collectively possess deep capacities.

Recent international challenges have strengthened the case for BRICS cooperation. According to the OECD, the United States' aid cuts resulted in the largest ever decline in foreign aid on record in 2025, while growth in global climate finance lost momentum. In June, the World Bank scrapped its target requiring 45 percent of its financing to produce climate co-benefits, a move widely tied to US pressure.

That makes practical South-South cooperation a necessity in global green finance and technology. The BRICS-founded New Development Bank provides the institutional basis for mobilizing resources, with a solid pipeline of projects. The NDB took shape while BRICS countries were simultaneously negotiating the Paris Agreement. The bank became fully operational in 2016 — the year the Paris Agreement entered into force. This means that unlike earlier development banks, the NDB was designed when climate was already a top global concern. This enabled members to embed green finance into the NDB from day one. The treaty establishing the NDB — the bank's supreme legal instrument — tasks it with mobilizing resources "for infrastructure and sustainable development projects".

What this means for climate finance is spelled out in plans and policies. The NDB's 2022-26 general strategy targets 40 percent of financing to be approved for climate mitigation and adaptation. The same strategy rules out financing any new coal-fired power capacity. The NDB approved $5.59 billion in climate finance during 2022-25, representing 44 percent of total financing over the period and beating its own 40 percent target during this period.

While these activities are similar to those of other development banks, the NDB has engaged in legal experimentation that reflects its nature as an institution wholly owned by emerging economies and developing countries. Its green debt framework, while designed to align with the global benchmark Green Bond Principles and broadly consistent with the sustainable finance taxonomy of the European Union, also leaves scope to issue bonds aligned with the standards of individual BRICS members.

The bank has also pursued local currency financing to reduce foreign exchange and other risks to borrowers. Its first green bond was denominated in the renminbi and was the first green bond issued by an international institution in China's domestic market. In 2025, local currency financing accounted for about 46 percent of new project approvals, a record share, mainly in renminbi, rand and rupee. Overall, 29.3 percent of all NDB financing was in the currencies of bank members by the end of 2025. However, the vast majority of the NDB portfolio remains denominated in US dollars.

After a decade of operations, the NDB has established itself as a growing source of climate finance. With the expanding of membership, the bank's strategy during the next five-year period is likely to continue to target greater financing in member currencies while strengthening focus on technologies.

However, the NDB's impact is constrained by the bank's scale. Since inception, the NDB has approved almost $43 billion by early 2026 across all projects. That is meaningful for the Global South, but scaling the BRICS contribution to climate action requires direct cooperation among the BRICS members.

The members of the grouping recently started to explore the potential for closer climate cooperation within BRICS frameworks, welcoming a memorandum of understanding on a BRICS Carbon Market Partnership in 2024. In 2025, the BRICS leaders endorsed a broad climate leadership agenda and adopted a cooperation framework for climate finance.

In addition to potential cooperation on a BRICS Carbon Markets Partnership to share expertise, build capacity and link carbon markets with climate finance, the framework identified potential to develop a catalog of national sustainable finance taxonomies to identify areas of convergence, while also considering promotion of "interoperability" of different approaches.

This activity to promote cross-border green finance flows could draw lessons from the EU-China (later joined by Singapore) common ground taxonomy and ASEAN's sustainable finance taxonomy. There are also positive signs for greater cooperation between the NDB and national development finance institutions.

Another 2025 document proposed options for enhancing BRICS cooperation on climate tech, including setting up a BRICS climate "patent pool", as one of several non-binding models, alongside humanitarian and open-licensing proposals, to widen access to climate-related technologies.

The key question is how many of these activities will be put into practice and how many will remain on paper only. The voluntary, non-legally binding format of BRICS cooperation provides flexibility but can also mean limited clarity about how to implement plans and assess results.

Finally, BRICS climate action could be strengthened through deeper engagement with the United Nations Framework Convention on Climate Change institutions and other development banks. Following the BRICS leaders' call on multilateral development banks to enhance collaboration with climate funds, the NDB could explore partnership agreements with the Green Climate Fund and the Adaptation Fund. The NDB could also build on its initial engagement with the UNFCCC's technology transfer body, the Climate Technology Centre & Network, to develop a pipeline of de-risked climate-tech projects.

While the NDB already participates in the Multilateral Development Bank climate action group, with common methodologies and joint reporting, it has engaged in little joint lending with other MDBs, unlike the Asian Infrastructure Investment Bank. Greater co-financing would be another way to stretch the NDB's resources.

Following next month's APEC meeting in Shenzhen, attention in China will turn to China's chairing of BRICS in 2027. The opportunity will be to build out the BRICS contribution to an evolving ecosystem of climate action standards and financing.

Achieving this would turn ambitious ideas into concrete cooperation while strengthening links with other key sources of finance and tech capacity.

The author is a professor at the School of Transnational Law at Peking University.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.