This eighth edition of the Joint Report on Multilateral Development Banks’ Climate Finance is an overview of climate finance committed in 2018 by the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDBG) and the World Bank Group (WBG). In addition, this year’s report summarises information on climate finance tracking from the Islamic Development Bank (IsDB).
The AfDB, ADB, EBRD, EIB, IDBG and WBG have reported jointly on climate finance since the first edition, published in 2012, which reported figures for 2011. Collectively, they have committed almost US$ 237 billion in climate finance during the past eight years in developing and emerging economies.
The data and statistics presented in this year’s report result from uniform application of the methodologies developed jointly by the MDBs for their portfolios.
In this report, the term “MDB climate finance” refers to the financial resources (own-account and MDB-managed external resources) committed by MDBs to development operations and components thereof which enable activities that mitigate climate change and support adaptation to climate change in developing and emerging economies. See Annex G for further details of the report’s geographic coverage.
Collectively, the MDBs committed US$ 43,101 million in climate finance in developing and emerging economies in 2018 — US$ 30,165 million or 70 per cent of this total for climate change mitigation finance and US$ 12,936 million or 30 per cent for climate change adaptation finance. The net total climate co-finance committed during 2018 alongside MDB resources was US$ 68,050 million. When combined with the MDB climate finance, it brings the year’s total climate finance to US$ 111,152 million. This is the fourth edition of the Joint Report on MDBs’ Climate Finance to include climate co-finance.
MDBs apply two distinct methodologies – with fundamentally different approaches – to tracking climate change adaptation finance (or “adaptation finance”) and to tracking climate change mitigation finance (or “mitigation finance”). Both methodologies, however, track and report climate finance in a granular manner. In other words, the climate finance reported covers only those components and/or subcomponents or elements or proportions of projects that directly contribute to or promote adaptation and/or mitigation.
The MDBs estimate adaptation finance using the joint MDB methodology for tracking climate change adaptation finance. This methodology is based on a context- and location-specific approach and captures the amounts associated with activities directly linked to vulnerability to climate change.
MDBs make the best possible efforts to differentiate between their usual development finance and finance provided with an explicit intent to reduce vulnerability to climate change. Thus, the methodology for tracking adaptation finance attempts to capture the incremental cost of adaptation activities. In contrast, mitigation finance is estimated in accordance with the joint MDB methodology for tracking climate mitigation finance, which is based on a list of activities in sectors and sub-sectors – according to each MDB’s operational practice – that reduce greenhouse gas (GHG) emissions and are compatible with low-emission development. These fundamental differences between the two methodologies result in figures for mitigation finance and adaptation finance that are not directly comparable.
The MDBs’ methodologies for tracking climate finance align with the Common Principles for Climate Change Mitigation Finance Tracking2 that the MDBs and the IDFC jointly agreed and first published in March 2015. In July 2015 the MDBs and the IDFC agreed an initial set of the Common Principles for Climate Adaptation Finance Tracking.3 The organisations continue to harmonise their approaches to tracking adaptation finance. At COP24 they announced a plan to work jointly to review and strengthen the Common Principles for Climate Mitigation Finance Tracking
The IsDB applied the MDB methodologies for tracking climate finance (mitigation and adaptation) to its 2018 projects in key sectors (energy, transport, agriculture, and water and sanitation). In the years ahead, the IsDB will apply the Common Principles in all of its projects as well as the operations of IsDB Group members the Islamic Corporation for the Development of the Private Sector (ICD), the International Islamic Trade Finance Corporation (ITFC) and the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC). In 2018, IsDB climate finance was estimated to be US$ 351 million (approximately 42 per cent of approvals in the reported sectors), of which US$ 226 million (65 per cent) was for climate change mitigation, US$ 77 million (22 per cent) was dedicated to climate change adaptation and US$ 47 million (13 per cent) had dual benefits of mitigation and adaptation. The IsDB group will report fully on the details of its climate financing (modes, regions, sectors, and so on) in future reports as it expands the application of the joint MDB methodology consistently in all departments and entities.