Blog Posts: multilateral development banks

Climate change doesn't feature prominently in the World Bank's COVID-19 response yet. As countries turn to long-term recovery, the Bank should prioritize environment- and climate-friendly policy lending programs.

The coronavirus pandemic has compounded highly unequal development in Latin America's cities. Investing in infrastructure and public services for marginalized areas can help the region build back better.

The public financial institutions tasked with funding sustainable development worldwide have outlined a framework for aligning operations with the Paris agreement, but they need to start announcing when they'll move off unaligned projects, and how projects will qualify.

Development banks committed record funds to climate finance in 2018, but key vulnerabilities in adaptation finance, cofinancing and portfolio alignment persist, and some institutions even backslid. To meet 2020 goals, MDBs need to kick it into overdrive.

Development banks can align their investments in electricity grids with the Paris Agreement by incorporating a shadow carbon price and making sure their investments support long-term plans for decarbonizing the electricity sector.

Analysis of 35 large banks found that, by and large, they are unable to convey their overall climate progress. Many report on their climate-friendly investments, but few offer the full picture by also reporting their financing of activities that add emissions, too.

Multilateral development banks can put a charge into climate finance through expanded use of de-risking approaches, like guarantees and similar instruments.

Multilateral development banks are key pistons in the climate finance engine, providing significant international financing for climate adaptation and mitigation and mobilizing private sector capital. Our analysis of the latest snapshot of MDB climate finance for 2016 offers cause for celebration – and concern.

WRI researchers analyzed energy supply investments from the World Bank, International Finance Corporation and Asian Development Bank. While only 3 percent of this financing is misaligned with the goal of limiting temperature rise to 2⁰C, about half fell into a “conditional” category; its alignment with a low-carbon future depends on how projects are designed.

A G20 communique on green finance and new national guidelines on greening China's financial system could help shift investments from high-carbon to low-carbon sectors.