Multilateral, national and international public financial institutions should play a major role in providing investments to meet the climate and other sustainability challenges, as well as to meet the goals of the Paris Agreement.  

These institutions have begun an important shift towards sustainability—but more is needed to ensure that all public development finance supports, rather than undermines, our shared climate goals. 

The institutions include the International Monetary Fund and the multilateral development banks (MDBs); specialized funds such as the Green Climate Fund (GCF), the Adaptation Fund, and the Climate Investment Funds; and bilateral and national development finance institutions. 

By analyzing their investment portfolios and policies and identifying opportunities for change, we help enable financial institutions to shift their investments toward sustainable and climate-compatible development. Our engagement consists of timely analysis, convening of key stakeholders, and direct engagement with the institutions. We focus this work on: 

  • Enhancing the quality and quantity of the development banks’ dedicated climate finance; 

  • Ensuring alignment of the banks’ overall investment portfolios with global climate adaptation and mitigation goals; and 

  • Promoting bank policies and practices that protect vulnerable people and ecosystems. 

International financial institutions play a central role in helping to fund activities in developing countries that support sustainable, climate resilient, and low-carbon development. By analyzing their investment portfolios and identifying opportunities for change, we help enable these institutions to shift their investments toward sustainable and climate compatible development.  

We rely on our deep knowledge of these institutions, the UNFCCC finance negotiations, and of the climate finance architecture; on our convening power; and on our in-house sectoral expertise to produce timely research products to inform key decisions. While our efforts apply to a broad range of financial institutions, our focus is primarily on: 

  • MDB policies, practices, and governance 
  • Policies, practices, and governance of specialized climate funds, especially the GCF 
  • UNFCCC finance negotiations 
  • IDFC analytical and strategic activities 

In addition to the MDBs, other development finance institutions (DFIs), such as national, bilateral, and regional development banks, play an important and growing role in financing sustainable development, including providing climate finance. We have also begun research to better understand the role of the International Monetary Fund in sustainability.  

Throughout this work, we draw on our landmark 2018 paper, Towards Paris Alignment, which explores how MDBs can align their activities with the goals of the Paris agreement, mainstream mitigation and adaptation, and more. In Aligning Electricity Transmission and Distribution Investments with a Paris Agreement Pathway, we explored Paris alignment at a sectoral level.  

Previous research looked at financing the energy transmission; establishing social and environmental safeguards within the context of development finance; governance in World Bank project planning; and more.