The ability of low- and middle-income countries to respond and adapt to the effects of climate change is being threatened by a lack of funds, an Australian research study published on Thursday has found.

Researchers from the University of Melbourne found that current approaches to measuring emissions associated with government lending are steering private climate investment away from countries that need it most.

The team from the university's Sustainable Finance Hub said the standards and frameworks that exist to evaluate the emissions and climate-risk profiles of sovereign debt portfolios have unintended negative consequences for countries seeking investment.

They found that, in one metric used by investors to measure the emissions intensity of their lending to governments, those countries fare far worse than high-income economies because of their lower GDPs and greater reliance on emissions-intensive industries such as agriculture.

Those countries face substantial challenges raising funds from private investors, Arjuna Dibley, lead author of the study and head of the Sustainable Finance Hub, said in a media release.

"If well-meaning sustainable finance metrics make it harder again, this endangers our global response to climate change, which will have powerful negative effects for us all, including the private investors making these decisions," Dibley said.

The study said many of those countries already face untenable debts and that the emissions intensity metric could further disincentivize investors to lend to the countries most in need of climate finance.

It called on investors to work with researchers to develop new metrics for judging sovereign debt portfolios that considers nations' historical emissions performance and future trajectories and for financial institutions, regulators and researchers to evaluate how current metrics are impacting access to climate finance.

(Cover via CFP)