Finance
A Protracted US–Iran War Could Strain Climate Finance From Wealthy Countries to Developing Nations – Inside Climate News
WASHINGTON, D.C.—The ongoing war in Iran is casting a long shadow over the climate finance commitments countries agreed to in 2024, experts warned, as surging oil prices and rising defense budgets put further pressure on the limited pot of money developing nations are counting on to stave off worsening impacts from a warming planet.
The World Bank and the International Monetary Fund’s annual spring meetings are underway in the capital this week, with a focus on a coordinated global response to a world economy under pressure from slower growth and rising debt, exacerbating global inequities.
The U.S. war in Iran adds new supply-chain challenges. In a press briefing Tuesday, the IMF slashed its growth forecast to 3.1 percent for the year, down from 3.3 percent in January, with global inflation rising to 4.4 percent.
“Our severe scenario assumes that energy supply disruptions extend into next year, with greater macro instability. Global growth falls to 2 percent this year and next, while inflation exceeds 6 percent,” said Pierre‑Olivier Gourinchas, the IMF’s director of research.
The blunt assessment has caused a scramble to determine what financial support the institution can offer to member states. And it has raised fresh questions about climate-finance obligations, already under strain from donor-country budget cuts and the United States jettisoning global climate commitments under the second Trump administration. One of President Donald Trump’s first actions back in office last year was ordering the U.S. to withdraw from the Paris climate agreement.
Since the COVID-19 pandemic, wealthier countries that promised climate finance have experienced widening fiscal deficits and rising debt, the Organisation for Economic Co-operation and Development found in its latest assessment. As a result, aid from donor countries has already declined sharply—dropping almost 25 percent in 2025 compared to 2024. Even before the Iran conflict began, that was projected to drop further this year.
COP29, the global climate conference held in late 2024 in Baku, Azerbaijan, set a commitment of $300 billion per year by 2035, with a broader goal of reaching $1.3 trillion annually from public and private sources. Called the New Collective Quantified Goal (NCQG), the arrangement replaced the previous $100 billion-a-year commitment that wealthy nations had met belatedly in 2022, two years after the deadline.
Developing nations widely criticized the $300 billion figure as grossly inadequate, given the scale of the climate crisis. These countries are among the least responsible for the pollution driving that crisis and among the hardest hit by its effects.
The Iran war has triggered a new set of worries as top economists and experts weigh potential impact and likely mitigation strategies.
“Even before the Iran conflict, reaching the NCQG target would have been difficult, particularly with the U.S. withdrawing from the Paris Agreement. The war worsens the outlook,” said Gautam Jain, senior research scholar at the Center on Global Energy Policy at Columbia University.
He said sustained disruption of the Strait of Hormuz would exacerbate the problem and the effects would weigh on the global economy. As a result, aid budgets would decline and the political pushback to external spending would increase.
The conflict is “pushing energy security to the forefront of government agendas,” Jain said. That will likely strengthen incentives to deploy more renewables and other forms of domestic clean energy, but the war’s economic convulsions could cut both ways for the energy transition.
“In low-income countries, the transition could be significantly delayed, given limited fiscal capacity to absorb sustained energy price shocks,” Jain said.
One of the main priorities for the World Bank during the meetings in Washington is to develop a new Climate Change Action Plan to replace the one expiring in June. “In the current geopolitical context, progress on this front looks quite unlikely,” Jain said.
Jon Sward, environment project manager at the Bretton Woods Project, which monitors World Bank and IMF policies, said countries that used to fund climate finance are now choosing to spend that money on other priorities.
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The Gulf crisis exposed the fragility of a global economic system tethered to fossil fuel extraction and use, Sward noted. For countries dependent on fossil fuel imports, “this is yet another price shock, and quickly diversifying to renewables is certainly an option that many countries are looking at,” he said in an email.
He said that although multilateral institutions such as the World Bank and the IMF have begun to assess the conflict’s fallout, it is not yet clear what their response will be or how the World Bank’s climate finance would be affected.
“All of this points to the need for more serious discussions on pausing debt repayments for affected countries and the mobilisation of non-debt creating forms of finance, in order to address the multiple, overlapping shocks facing countries in the Global South, in particular,” he said in his email.
Experts said that rising security and defense expenditures were also cutting into an already limited pot of money badly needed by developing countries struggling to cope with climate challenges.
“The system was already too fragile given that the U.S. leads all the major multilateral development banks … and has disavowed these targets,” said Kevin Gallagher, director of the Global Development Policy Center at Boston University. On top of that, he said, U.S. threats to abandon NATO’s European countries incentivizes them to prioritize defense budgets over climate finance.
He said developing countries are already under pressure to cough up climate funding on their own. The current conflict could make that nearly impossible.
“This year was supposed to be putting together a roadmap to take the $300 billion annual target to the agreed upon $1.3 trillion. This is likely to be abandoned unless new donors such as [the] UAE, China and others step in to fill the gap left from the West,” Gallagher said in an email.
The crisis in the Persian Gulf makes the loudest case for renewables, he said. “The energy security argument from this conflict is to diversify from fossil fuels. The Dutch took that cue after the Middle East oil shock of the 1970s to build the world’s best wind turbines, and China did after Middle East conflicts in this century. Fossil fuels are now a bad bet on security, economic and climate grounds. The writing is on the wall.”
Gallagher said the World Bank should accelerate solar and wind technology programs across the world. “If the Fund and the Bank don’t rise to this occasion,” he said, “not only is the global economy and climate at stake, but so is the legitimacy of these institutions.”
Gaia Larsen, a climate finance expert at the World Resources Institute, said it’s too early to know whether stronger interest in energy independence through renewables is translating into shifts in investment. But “if we’re trying to think about long-term peace and long-term access to energy, then renewables are really increasing in prominence,” she said.
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Aman Azhar is a Washington, D.C.-based journalist who covers environmental justice for Inside Climate News with focus on Baltimore-Maryland area. He has previously worked as a broadcast journalist and multimedia producer for the BBC World Service, VOA News and other international news organizations, reporting from London, Islamabad, the United Arab Emirates and New York. He holds a graduate degree in Anthropology of Media from University of London’s School of Oriental and African Studies (SOAS) and an MA in Political Science from the University of the Punjab, and is the recipient of the Chevening scholarship from the UK government and an academic scholarship for graduate studies from the Australian government.
 
Author: Leonardo Aguilera, CEO, Banreservas
Banreservas’ international expansion strategy is centred on strengthening economic ties with the Dominican diaspora as a strategic economic partner, rather than just operating as a full retail bank abroad, and the bank has successfully used mortgage fairs as part of this expansion strategy. These client-centric engagement events bring together diaspora clients, credible Dominican real estate developers, fiduciary-backed projects and bank representatives in one venue to help address key diaspora challenges such as distance and lack of trusted intermediaries, legal and documentation uncertainty, difficulty assessing projects remotely and limited access to tailored financing.
By simplifying the sending process from the US and Europe, reducing operational friction, and offering greater convenience and security, Banreservas has incentivised increased use of formal remittance channels. This strategy has had, and is expected to continue to have, a highly positive impact on remittance flows to the Dominican Republic, both in terms of volume and formalisation.
Reimagining the diaspora relationship
Banreservas’ model relies on representative offices set in strategic cities to provide advisory, pre-qualification and customer support services, while the financing and account opening itself is referred to Banreservas in the Dominican Republic, where they are operatively managed and booked.
The US (New York and Miami) and Spain (Madrid) were chosen as priority hubs to channel diaspora engagement and long-term investment because they are home to some of the largest and most economically active Dominican communities worldwide. By establishing representative offices in these strategic locations, Banreservas delivers tailored financial services to historically underserved expatriate communities, enabling them to invest, save, and build wealth in the Dominican Republic while contributing to national economic development, unlocking sustainable growth opportunities and deepening its role as a financial bridge between Dominicans abroad and their home country.
Banreservas uses mortgage fairs to compress what is traditionally a long, fragmented cross‑border process into a single, guided experience that combines education, advisory, and support. Diaspora clients can receive on-the-spot pre-qualification, explore real estate projects nationwide, and receive information and guidance about loan processes, although final approvals and disbursements are processed in the Dominican Republic.
The response in the US and Madrid has been characterised by sustained momentum and the diversity of participant profiles, from first-time buyers to repeat investors and returning nationals, which suggests that the fairs are resonating beyond a narrow segment of the diaspora. In US cities with long-established Dominican communities, the fairs have evolved into anticipated events rather than exploratory initiatives, with those in New York and Lawrence generating financing exceeding $49m. However, the initiative was newer in Europe, so the response in Madrid followed a slightly different trajectory, with early editions focusing heavily on education and orientation. That said, the first fair in Madrid attracted thousands of participants and closed with financing requests of more than $21m.
Risk mitigation is central to the model and projects are carefully vetted, many supported under a fiduciary account or an estate asset trust fund and backed by clear legal frameworks. Banreservas’ direct involvement is one of the defining features of its diaspora strategy to ensure transparency, regulatory compliance and investor protection throughout the process. By offering direct access to Banreservas’ experts, vetted developers, fiduciary-backed projects and consistent financing terms, these events are helping create a relationship-building platform that improves transparency, credibility and institutional confidence. Internal customer experience reports emphasise that word-of-mouth referrals, repeat attendance, and post-fair engagement are among the clearest indicators that trust has been established organically, particularly within close-knit diaspora communities. Banreservas’ role as the national leading institution further reassures clients investing from abroad.
Transaction to transformation
Rather than a single-product offering, Banreservas approaches diaspora customers with a portfolio mindset, providing a robust cross-border selection including mortgage loans, savings and checking accounts, remittance-linked products and investment solutions tied to real estate development.
Banreservas has deliberately adopted a scalable and selective expansion logic
Remittances are a core strategic pillar of Banreservas’ international expansion, and the creation of new digital channels and specialised financial products are helping transform remittances into a gateway for deepening financial inclusion. The Remesas Reservas app enables Dominicans abroad to send money from the US and Europe using international cards, with funds credited directly to bank accounts or debit cards in the Dominican Republic, eliminating the need for cash, queues, or physical travel. The app is complemented by the home delivery remittances service, which extends financial access to rural communities that were previously excluded from the formal financial system. Service performance data shows that 97 percent of remittances sent through the app complete the entire process digitally, while 94 percent are received directly in bank accounts, strengthening financial traceability. This supports the sustainability and potential growth of remittance inflows to the Dominican Republic that already exceeds $12bn annually, while also expanding the banked customer base and improving the overall efficiency of the national financial ecosystem.
The strategy is further strengthened by the introduction of remittance-based consumer and mortgage loans, specifically designed for remittance recipients. These products allow recurring remittance flows to be converted into formal financial history, facilitating access to credit, and reinforcing the ‘bankarisation’ process. As a result, remittances evolve from a basic transfer mechanism into a financial development tool, integrating beneficiaries into the banking system with solutions tailored to their real income patterns and needs.
Mortgage financing in the Dominican Republic is embedded within a broader set of banking solutions designed to support the full investment and ownership journey. At the core are residential mortgage products structured for non-resident clients looking to acquire property in the Dominican Republic. These are complemented by linked deposit and savings accounts, which allow clients to organise funds, manage payments and maintain an ongoing banking relationship once the purchase process begins. In parallel, Banreservas leverages its digital channels and remittance services to facilitate the movement of funds and day-to-day interaction with Banreservas, reinforcing continuity beyond the initial transaction.
For first-time diaspora investors, the emphasis is on financial orientation and readiness with solutions structured to simplify entry into the formal mortgage system in the Dominican Republic. For returning nationals, products and advisory conversations are typically aligned with reintegration objectives. In both cases, the underlying principle is adaptability within a controlled institutional framework, rather than bespoke products that introduce additional risk.
They have the support of President Luis Abinader, who has created the conditions for Dominicans in the diaspora take advantage of the macroeconomic stability, legal security, and full guarantees that receive all foreign investors who trust in the Dominican Republic to make their business.
Modernising remittance ecosystem
Modernising the remittance ecosystem combined with specialised financial products generates a direct multiplier effect on strategic sectors, strengthening the real economy and territorial development. In the construction sector, the remittance mortgage loan transforms recurring remittance flows into formal financing capacity for homeownership and has taken centre stage in Banreservas’ participation in international mortgage fairs. Diaspora demand supports property acquisition and upstream activities such as project development, construction services, materials supply, legal services and professional employment.
Equally important is the impact on financial deepening and formalisation. When diaspora investors enter the banking system through regulated mortgage channels, their participation strengthens the use of formal financial products, thereby expanding the reach and resilience of the financial system. This dynamic is a key contribution to economic maturity, as it encourages long-term financial relationships rather than one-time transactions.
From a tourism perspective, the strategy strengthens the economic and emotional ties between the diaspora and the country. Home purchases financed through mortgage loans paid via remittances promote more frequent visits, longer stays, and increased spending on tourism-related services, while also encouraging investment in vacation properties and second homes. Additionally, increased formal income and financial inclusion among remittance-receiving households boosts domestic consumption, benefiting transportation, commerce and service sectors closely linked to tourism.
The scalable model
Banreservas has deliberately adopted a scalable and selective expansion logic, prioritising model stabilisation in proven markets before extending to new ones. However, any future expansions are likely to be opportunity-driven and phased, to ensure that each new market sustains long-term client relationships. This strategy allows for progressive expansion, but only where three conditions converge: concentrated Dominican diaspora communities with sustained economic ties to the Dominican Republic, regulatory and operational feasibility, particularly the ability to support activity through representative offices or equivalent structures, and demonstrated demand signals.
The next three to five years points to a qualitative shift in diaspora investment behaviour. First, there is a clear movement from sentimental ownership to strategic investment. Second, diaspora investors are showing a stronger preference for formal, institutionally mediated channels. And finally, the younger diaspora segment tends to prioritise entry-level or future-orientated assets, while more established individuals focus on retirement, anchoring, or reintegration-linked purchases. This diversification of motivations is influencing how Banreservas structures advisory conversations and sequences client engagement over time.
With diaspora investment contributing to national economic development primarily by transforming external household income into structured, long-term domestic capital, Banreservas’ long-term objectives are driving financial inclusion, fostering foreign direct investment and supporting key productive sectors. By empowering confident diaspora investment, Banreservas reinforces its leadership role in national development while expanding its international footprint in a sustainable way by adopting a focused model that strengthens value creation in the Dominican Republic through targeted international interaction.
From a growth perspective, the expansion allows Banreservas to diversify its customer acquisition channels by engaging Dominican communities abroad at earlier stages of their financial decision-making. From an economic development standpoint, the strategy is goal orientated.
By facilitating diaspora investment in housing and related sectors in the Dominican Republic, Banreservas acts as a conduit that transforms external income flows into productive domestic investment.
TORONTO — Insurance provider Intact Financial Corp. says it had higher catastrophe losses and large losses in the second quarter than it initially expected.
Intact Financial reported that its combined catastrophe and large losses were $247 million above its expectations for the second quarter on a pre-tax and net of reinsurance basis.
The combined higher losses amount to $1.08 per diluted common share after tax.
Total catastrophe losses reached $416 million on a pre-tax basis during the second quarter and net of reinsurance.
The company says catastrophe losses in Canada were due to weather events, while commercial fires drove losses in the United Kingdom and Ireland.
Intact Financial says the increase in large losses included higher-frequency fire claims as well as other property losses across different geographies.
This report by The Canadian Press was first published July 8, 2026.
Companies in this story: (TSX: IFC)
The Canadian Press
For a company navigating one of the most consequential transformations in its history, financial clarity is not optional—it is essential. Natura &Co, the Brazilian personal care and cosmetics group behind iconic brands such as Natura and Avon, has long been committed to combining purpose-driven business with commercial performance. After a period of strategic portfolio reshaping, including the divestiture of its Aesop and The Body Shop holdings, the company is now sharpening its focus on profitability and operational excellence across Latin America and global markets.
At the center of that effort sits a deceptively complex challenge: understanding, in real time, which revenue and cost factors are driving or eroding gross margin across a highly diversified business. For years, answering that question meant manual reporting, delayed insights, and finance teams spending valuable time on data gathering rather than analysis.
That’s now changing, thanks to a co-innovation initiative developed together with SAP and Numen, a global SAP partner specializing in digital transformation and enterprise software implementation.
From manual reporting to proactive decision intelligence
The project’s goal was to replace a labor-intensive gross margin analysis process with a generative AI application embedded directly into Natura &Co’s financial workflows. Built on SAP Business AI Platform, SAP’s unified foundation integrating business technology, data, and AI capabilities, the application connects directly to data in SAP S/4HANA to provide finance teams with automated insights and narrative recommendations in real time, without the need for manual data pulls or offline reporting.
The application enables users to explore revenue, cost, and margin drivers interactively, identifying at a glance which elements are protecting or eroding margin performance across markets and product lines. Crucially, human oversight remains central to the design: the AI application generates insights, while finance professionals retain full control over interpretation and decisions.
“The implementation of gross margin analysis using AI in SAP S/4HANA marked an inflection point in the analytical capability of our finance area,” said Rogério Dias Garcia, tech manager, ERP Latam, Natura &Co. “We overcame delays and raised the standard of insights by integrating margin analysis from SAP S/4HANA with a large language model connected via the SAP AI Core layer. This architecture allowed us to provide, in an agile, secure, and completely anonymous manner, a stratified and precise view of gross margin offenders and protectors—discriminating exactly which revenue or cost elements were driving market performance.”
A collaborative architecture for scalable AI adoption
Natura &Co’s application derived from a prototype SAP partner Numen created in early 2024 at SAP’s global Hack2Build on business AI, leveraging the generative AI capabilities of SAP Business AI Platform. The solution was designed and developed through close collaboration between Natura &Co, Numen, and SAP. From the outset, the approach was to align AI adoption with concrete business priorities, ensuring the application would be scalable and production-ready rather than a standalone prototype.
Numen brought deep SAP implementation expertise to the project, combining knowledge of SAP S/4HANA architecture with hands-on experience in building solutions on SAP Business AI Platform. The technology stack—SAP S/4HANA, SAP AI Core, SAP Fiori, and SAP Business Technology Platform—provided the secure, integrated foundation needed to connect financial data with generative AI capabilities in an enterprise context.
“SAP enabled the transformation by providing the technological foundation and expert support,” said Carlos Aravechia, head of Data Design & Intelligence at Numen.
The success of the project has validated a broader conviction at Natura &Co: that generative AI, embedded directly in ERP workflows, can fundamentally reposition finance from a transactional function to a strategic business partner.
A blueprint for other businesses
The Natura &Co project demonstrates a pattern that other organizations can replicate, particularly those running SAP S/4HANA. The combination of structured ERP data with the contextual reasoning capabilities of large language models creates a foundation for decision intelligence that goes well beyond traditional business intelligence tools.
The project was built within a six-month co-innovation sprint and went live in August 2025. It is currently in use across Natura &Co’s Equador operations.
Looking ahead, Natura &Co is already planning the next phase: integrating Joule Agents to further automate the extraction of standard analytical content and deepen the AI-driven optimization of financial processes.
“The success of this initiative validates the transformative potential of embedded AI within our ERP,” Dias Garcia noted. “We are now ready to move forward—deepening these insights and integrating the capability of Joule Agents to maximize the extraction of standard content and further optimize our business decisions.”
For SAP customers evaluating how to move from AI experimentation to AI in production, the Natura &Co project offers a concrete, replicable model: start with a high-value, well-defined business process, embed AI directly into existing workflows, and build in human oversight from the start.
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