Sustainability For All, Not Just For Some: How a Sovereignty Gap is Causing Climate Finance Shortfalls

Our climate finance crisis is not a problem of insufficient funds, but of political will and tax injustice. A recent piece for the Energy Mix, argues that climate finance shortfalls are caused by a “sovereignty gap” - the erosion of countries’ power to tax the wealthy and corporations fairly. 

This piece by Mager (2025) criticizes wealthy nations for cutting aid while relying on inadequate, voluntary climate finance pledges. It emphasizes that current tax rules, shaped by decades of unfair treaties and corporate lobbying, ultimately have both fueled the climate crisis and undermine governments’ ability to fund climate solutions. Research cited in the article from the Tax Justice Network shows that governments could raise $2.6 trillion annually by implementing a modest wealth tax on the richest 0.5%, curbing corporate tax abuse. This revenue could both meet global climate finance needs and leave money for domestic investment for public services and green jobs.

The author calls for a reclaiming of tax sovereignty through wealth taxes, fair corporate taxation, and international reforms such as a UN Tax Convention to finance climate action, and advance development and equity. Policymakers claim that public money for climate action is limited, but the article shows the funds exist if tax systems are reformed, connecting the climate crisis to broader economic inequality. The article underscores how fair, redistributive tax systems can finance immediate climate solutions. By reclaiming tax sovereignty and fairly taxing extreme wealth and corporate profits, governments can advance climate action while also promoting equity and development, without depending on broken aid pledges.

Written by Sabrina Careri, for Ann Dale.

Image credit: Matthias Heyde | Unsplash