Africa’s climate finance framework is expanding rapidly, but weak enforcement threatens to undermine its ability to protect financial systems and unlock investment at scale.
That is the central conclusion of recent research highlighted by associate Prof Paola D’Orazio, and the IÉSEG School of Management, which finds that while climate-related financial regulations are rapidly accelerating across the continent, most remain voluntary, fragmented and lightly enforced.
The recent research titled Financial Regulation for Climate Resilience: A Comparative Analysis Across African Economies finds that African countries have significantly increased the number of climate-related financial policies after the Paris Agreement in 2015. These measures include climate risk disclosure guidelines, green bond frameworks, sustainable finance principles and supervisory expectations for banks and insurers.
The core weakness identified by the study is enforcement. Most climate finance rules in Africa are non-binding, meaning compliance is encouraged rather than legally required. As a result, climate risk is often treated as a reputational or reporting issue rather than a core financial stability concern.
The climate-related financial policies that most clearly suffer from weak enforcement include climate-risk disclosure standards, such as IFRS S1 & S2, Task Force on Climate-Related Financial Disclosures, Task Force on Nature-Related Financial Disclosures, JSE Climate Disclosure Guidance, etc, where voluntary reporting often lacks verification and penalties.
Such frameworks can create a false sense of progress. Policies may exist on paper, but without enforcement mechanisms, they struggle to change real-world behaviour.
The study also establishes that most green bond frameworks in African economies have minimal post-issuance oversight. Despite green bond deals totalling nearly $10-billion across roughly 70 to 80 transactions by 2025, many of the frameworks behind these issuances lack strong enforcement mechanisms such as independent verification and mandatory impact reporting, limiting their credibility.
Carbon pricing and carbon credit markets remain undeveloped among African economies due to weak monitoring systems. Of the 54 African countries, only Morocco, Mauritania, Senegal, Côte d’Ivoire, Kenya, and Botswana are reported to have carbon pricing initiatives under consideration.
South Africa is the only African country with a binding carbon tax (introduced in 2019). Its rate was increased in 2025 to R236 per tonne of CO2 and is planned to rise by 2030.
It also emerges as the most advanced jurisdiction, with climate risk disclosures and early climate stress-testing initiatives.
The paper by Prof D’Orazio also notes that mandatory requirements, such as enforceable disclosure standards, prudential capital adjustments or legally binding stress tests, remain rare. Even where rules exist, regulators often lack the technical capacity, data infrastructure or legal authority to monitor compliance effectively.
The study attributes the lack of climate finance attraction to these weak policy enforcements. According to the Climate Policy Initiative, climate finance flows to Africa increased by 48% to roughly $44-billion in 2021/22. However, this is only around 23% to 25% of the estimated financing required to meet African nationally determined contribution targets by 2030.
