Is climate finance flow for developing economies promoting climate change mitigation?

The investment needs to achieve sustainable development goals are challenging for economies worldwide, mainly for developing economies. Developing economies have capital in short supply, and consequently, they have few financial resources to improve and implement climate change adaptation and mitigation measures. Climate finance is a financial support from developed economies to developing ones which is focused on climate change issues adaptation and mitigation strategies. Developing economies are vulnerable to climate change issues. Besides environmental pollution, climate change also affects food production, water supply, and access to energy. The question that arises is if climate finance is helping developing economies accomplish sustainable development goals, this is, mitigating environmental degradation but simultaneously promoting growth and development. The main findings revealed that climate finance and renewable energy consumption are effective in helping developing economies accomplish sustainable development goals. However, climate finance could follow a U-shaped trajectory, and after a certain point of development starts to increase environmental pollution. This trajectory could be associated with adaptation strategies to climate change issues. Foreign direct investment and globalisation de facto and de jure increase environmental pollution but also increase green growth and sustainable development, because its environmental impacts are compensated by the boost in economic growth.