How GenAI Can Break the Bottleneck for Vulnerable Nations

In the race to fund global climate action, the lack of accessible financing is a well-known impediment, particularly for Small Island Developing States (SIDS). The numbers are stark: in 2021–2022, international adaptation finance flows to SIDS were a mere 0.2% of the global total. While calls to reform the international financial system are valid, they often overlook a more immediate, under-appreciated bottleneck: the project pipeline itself. This is a problem of process, and it is surprisingly susceptible to solutions offered by Generative Artificial Intelligence (GenAI).

The Urgent Problem: A Stagnant Pipeline

The evidence of a broken process lies within the climate finance pipeline. According to a recent Green Climate Fund (GCF) report, as of August 2024, a large portion of its project pipeline is aged (60%) and inactive (65%). This bottleneck disproportionately affects the most vulnerable, as the lion’s share of these stalled proposals originate from SIDS and Least Developed Countries (LDCs). The root cause is a crisis of capacity. U.N. reports such as the ‘Accessing Climate Finance: Challenges and opportunities for SIDS’ indicate that for a Direct Access Entity (DAE) in a SIDS nation developing a single project proposal typically takes two to three years. This exhausting timeline stems from a lack of specialized staff, overly complex approval processes and financial constraints to procure specialized expertise, which ultimately leads to a high rate of withdrawn or rejected proposals.

GenAI: The Promise of a Breakthrough

AEs recognize the immense potential of GenAI to enhance the development of proposals that meet rigorous donor standards. The vision is clear: faster, higher-quality submissions with a greater chance of success. While many project developers are personally using commercial AI (e.g. ChatGPT) to boost their workflows, formal adoption of more customized solutions is often slowed by internal friction, including staff anxieties about job security.

Interestingly, the most resource-constrained organizations, particularly smaller Direct Access Entities (DAEs), are proving to be the most agile adopters. For them, AI-powered software is not a threat but a vital force multiplier – a way to level the playing field and achieve more with limited resources.​ AI software holds the potential to accelerate both DAE and donor pipelines by streamlining concept note development and evaluation. Expertise and resource constrained DAEs have the most to benefit as GenAI can become a strategic asset offering transformative advantages:

• Elevated Technical Expertise. It improves the capacity of DAEs to submit higher-quality funding proposals by delivering on-demand technical expertise directly to their climate finance units.
• Lower Transaction Costs. It reduces the expense and effort of preparing complex documents and responding to feedback from funders.
• Mitigated Impact of Staff Turnover. It preserves critical knowledge within the AE, ensuring continuity and enabling new hires to seamlessly continue previous work.

GenAI’s most immediate value lies in its ability to augment key stages of the project cycle​. For example, customized solutions can meticulously check concept notes and proposals against specific donor criteria, significantly reducing the risk of rejection​. It can also support, proposal elaboration​ by enabling rapid but deep research and drafting compelling narratives, ensuring strong alignment with donor mandates and guiding documents.

A Strategic Ally for a Resilient Future

The future of GenAI in climate finance is incredibly promising, but realizing its potential requires navigating critical roadblocks. A significant technical expertise gap persists, as few DAEs have the in-house talent to build customized applications. More importantly, using public AI models with sensitive institutional data creates security risks that are simply not viable.

Addressing these challenges is where secure, domain-specific solutions become essential. As a first mover in this space, Janus Advisory’s Climate Finance Copilot provides a GenAI toolkit built to mitigate these risks, offering a secure alternative to commercial models. By directly addressing the capacity bottlenecks that cause pipelines to stagnate, tools like this prove GenAI is not just a tactical efficiency opportunity but a strategic ally. They will empower donors and AEs to operate with unprecedented speed and precision, helping to accelerate the deployment of critical climate solutions and foster a more agile and impactful climate finance ecosystem.