The Paris Agreement sets out the ambitious task of aligning all financial flows with its goals to avoid the worst impacts of warming. Multilateral Development Banks (MDBs) have an important role to play in making this goal a reality. Their development mandates, technical expertise, and track record on climate finance mean that MDBs can lead the way by helping developing countries avoid fossil fuel-intensive development pathways, by developing the necessary standards and investment criteria to assess the alignment of investments with the Paris Agreement’s goals, and by helping to mobilise increased volumes of climate finance.
In 2016, MDBs committed to align their financial flows with the goals of the Paris Agreement. This requires MDBs to ensure that all their activities advance low-carbon, climate resilient-development pathways, or at least not undermine these goals. At COP25 in December 2019, the MDBs presented an update on their alignment framework.
The MDBs have jointly committed to support the Agreement through aligning their activities, along six “building blocks” that cover the following areas:
- Alignment with mitigation goals
- Adaptation and climate-resilient operations
- Accelerated contribution to the transition through climate finance
- Engagement and policy development support
- Align internal activities
While their initial progress shows promise, important gaps and open questions remain. In 2020, the MDBs must rapidly step up their efforts to advance the Paris alignment agenda.
As outlined in this series of memos prepared by Germanwatch, NewClimate Institute, and World Resources Institute, here’s how the MDBs can deliver on each of these building blocks and thus their commitment announced in 2016.
1 The 9 MDBs are African Development Bank (AfDB), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IADB), Islamic Development Bank (IsDB), New Development Bank (NDB), and World Bank Group (WBG).
Hanna Fekete, Aki Kachi, Markus Hagemann, Frauke Röser and Leonardo Nascimento (NewClimate Institute)
Michael Ian Westphal and Lauren Sidner (World Resources Institute)