Rethinking risk in climate and nature finance through proximity, trust, and territorial knowledge.
Risk is one of the most influential concepts shaping climate finance today.
It informs investment decisions. It guides philanthropic strategies. It defines eligibility, compliance, due diligence, insurance, and development frameworks. It determines who is trusted, who is considered prepared, and who is seen as too uncertain, too small, or too complex to receive funding.
In technical terms, risk has become something we are very effective at measuring. But the same word does not describe the same reality for everyone.
When an investor speaks about risk, they are often referring to the possibility of losing capital. When an Indigenous community speaks about risk, they may be referring to the possibility of losing a river, a territory, collective memory, rights, or lives. When a community leader speaks about risk, they may be thinking about the next flood, the next drought, the next wildfire, or the next extractive frontier advancing into their territory.
It is the same word. But it does not describe the same reality.
But if risk shapes decisions, then proximity shapes how risk is understood.
Those closest to the impacts of climate change are often the first to understand its risks. Yet they remain among the furthest from the systems where those risks are defined and financed.
So, in the face of the defining polycrisis of our time, the question becomes: Are we paying attention to the right risks?
The climate crisis is also a crisis of valuation. For too long, dominant systems of value have pushed everything that could not be easily counted, priced, or reported to the margins, treating it as an “externality”. But ignored costs do not disappear. The debts created by the exploitation of people and ecosystems eventually come due, returning to us as climate disruption, biodiversity loss, and deepening inequality.
As droughts, floods, food insecurity, displacement, conflict, and economic instability.
The climate emergency has made visible what was ignored for too long. But now it is appearing in financial statements, portfolios, insurance models, and investment decisions.
And it brings us to a profound paradox at the heart of today’s climate finance system: The people doing the most to reduce climate risk and its impacts receive the smallest share of climate finance.
There is growing recognition that Indigenous Peoples, local communities, women, young people, grassroots organizations, and environmental defenders are among the world’s most effective stewards of biodiversity, ecosystems, and the cultural and social fabric that sustains life in those territories.
Across the world, they safeguard forests, protect watersheds, preserve knowledge systems, and strengthen local governance before crises emerge. In doing so, they generate levels of stability and resilience that rarely appears in financial models, but underpins every functioning system.
Communities are not simply recipients of investment. They are responsible for the capacity of people, ecosystems, and institutions to absorb shocks, adapt, and endure.
If we want resilient systems, then it is time to recognize that communities are among the world’s most effective, and most overlooked, climate and nature risk managers.
And once we see that, we begin to see something else more clearly: the role of proximity.
There is a vast landscape of Global South-led funding mechanisms such as community funds, Indigenous funds, territorial funds, activist socio-environmental funds whose defining strength is not only to move capital.
It is proximity.
Proximity to territories. Proximity to lived realities. Proximity to relationships, histories, knowledge systems where climate risk is experienced and understood. Lived realities that no dataset can fully capture.
This proximity allows them to identify risks that formal financial systems often miss entirely. It allows them to recognize opportunities that only emerge through trust built over time. It allows them to understand what is viable, legitimate, and needed in a given context, not in the abstract, but in relation to people and places.
In financial language, this is often called de-risking. But before large-scale finance ever reaches a territory, someone has already done the work of reducing uncertainty. Of building trust, strengthening local institutions, supporting community leadership. Staying present long after projects end and attention moves elsewhere.
These organizations do far more than channel finance. They create the conditions that make finance possible.
Proximity funding mechanisms enable resources to reach communities with legitimacy, effectiveness, and durability. They help capital move in ways that are better informed, more accountable, and more connected to the realities it seeks to transform. They de-risk the system not only for communities, but also for governments, philanthropy, and financial institutions.
This is why the debate on climate and nature finance cannot be reduced to the question of how much money is available. It must also ask how resources move, who defines the rules, which risks are recognized, and whose knowledge is trusted.
At a time when global conversations are increasingly focused on mobilizing finance at unprecedented scale, we must ensure that scale does not become another word for distance. The success of climate action depends on recognizing that those who protect territories are not a risk to investment. They are among its greatest sources of resilience.
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This reflection was at the heart of the opening remarks delivered by Juliana Tinoco, Executive Coordinator of Alianza, during Pathways for Resourcing Community-Led Climate Solutions: A multistakeholder dialogue promoted by Global South funds, convened by The Global South House during London Climate Action Week 2026.
The question of risk continued to resonate throughout the dialogue, strengthened by the reflections, data, and visions shared by speakers from across philanthropy, financial institutions, civil society, and community-led funding ecosystems.
As The Global South House, convened by Alianza, Rede Comuá, the Amazon Community Funds Network, and partners, we believe that reshaping climate and nature finance requires more than new instruments. It requires new meanings, new relationships, and a deeper recognition of the infrastructures of trust, proximity, and collective action that already exist across the Global South.
The challenge ahead is not only to mobilize more resources. It is to ensure that resources reach the people and places where they can make the greatest difference and to recognize that the future of climate finance depends on learning from those who have been protecting life all along.
