From Policy to Practice: Evaluating the Global Governance of Climate Change Finance and Greening Trade

Amidst increasing climate challenges, instruments such as climate finance and greening trade have become critical in driving global climate action. The growing relevance of these mechanisms, as reflected in the ICJ’s 2025 Advisory Opinion and the 15th Article 6.4 Supervisory Body meeting held in Bhutan in February 2025, underscores an urgent need to reassess existing environmental policies and legal frameworks to ensure accountability, fairness, and efficiency in global climate governance. This article argues that, unlike international trade law, which is based on hard-law rules that are legally binding, climate governance under the UNFCCC and the Paris Agreement is based on procedurally binding but substantively voluntary commitments. This lack of balance impedes climate action. The article shows that retreat from Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) further drives divergence within the Global North and Global South, inflating inequity, distrust and causing ineffectiveness in global climate action. Using emerging green trade standards (like carbon border adjustments) as examples, the article shows how the trade compliance requirements tend to be immediate and mandatory, whereas financial flows are likely to be delayed and discretionary, exposing a structural misalignment, especially impacting developing countries. Focusing on India, it explores to what extent climate finance commitments have been translated into domestic law and policy and coordinated with trade and industry. After this analysis, the paper proposes recommendations to reform the legal and institutional framework and align climate finance with the enforcement of green trade, embed equity principles into climate-trade architecture, and strengthen domestic law through statutory integration of climate finance to convert it from a mere policy aspiration to a tool for a just transition.