MANILA, PHILIPPINES: Climate financing by the world’s six largest multilateral development banks (MDBs) rose to a 7-year high of $35.2 billion in 2017, up 28% from the previous year.
The MDBs’ latest joint report on climate financing said $27.9 billion, or 79% of the 2017 total, was devoted to climate mitigation projects that aim to reduce harmful emissions and slow down global warming.
The remaining 21%, or $7.4 billion, of financing for emerging and developing nations was invested in climate adaptation projects that help economies deal with the effects of climate change such as unusual levels of rain, worsening droughts, and extreme weather events.
In 2016, climate financing from the MDBs had totaled $27.4 billion.
The latest MDB climate finance figures are detailed in the 2017 Joint Report on Multilateral Development Banks’ Climate Finance, combining data from the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank Group and the World Bank Group (World Bank, IFC, and MIGA). These banks account for the vast majority of multilateral development finance. In October 2017, the Islamic Development Bank joined the MDB climate finance tracking groups, and its climate finance figures will be included in reports from 2018 onwards.
Climate funds such as the Climate Investment Funds (CIF), the Global Environment Facility (GEF) Trust Fund, the Global Energy Efficiency and Renewable Energy Fund (GEEREF), the European Union’s funds for Climate Action, the Green Climate Fund (GCF), and others have also played an important role in boosting MDB climate finance. As well as the $35.2 billion of multilateral development finance, the same adaptation and mitigation projects attracted an additional $51.7 billion from other sources of financing last year.
Of the 2017 total, 81% was provided as loans. Other types of financial instruments included policy-based lending, grants, guarantees, equity, and lines of credit.
Latin America, Sub-Saharan Africa, and East Asia and the Pacific were the three major developing regions receiving the funds. The report contains a breakdown of climate finance by country.
The sharp increase came in response to the ever more pressing challenge of climate change. Calls to galvanize climate finance were at the heart of events such as the One Planet Summit in Paris in December 2017, 2 years after the historic Paris Agreement was adopted. Multilateral banks began publishing their climate investment in developing countries and emerging economies jointly in 2011, and in 2015, MDBs and the International Development Finance Club agreed joint principles for tracking climate adaptation and mitigation finance.
Climate finance addresses the specific financial flows for climate change mitigation and adaptation activities. These activities contribute to make MDB finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development, in line with the Paris Agreement. The MDBs are currently working on the development of more specific approaches to reporting their activities and how they are aligned with the objectives of the Paris Agreement.
“ADB’s climate investments reached $4.5 billion last year, a 21% increase from 2016 and in line with our climate finance commitment to reach $6 billion by 2020. ADB will continue to deepen its collaboration with other MDBs while employing consistent and rigorous methodologies to track climate finance,” said ADB Vice-President for Knowledge Management and Sustainable Development Mr. Bambang Susantono. “ADB acknowledges the critical role of external funding and has accessed $265 million in concessional financing from the Green Climate Fund to date. It also continues to establish innovative financing facilities, such as the Asia Pacific Climate Finance Fund, which supports financial risk management products that can help unlock financing for climate investments in clean technologies and that build resilience to climate risks.”