Skip to main content

2020 Joint Report on Multilateral Development Banks’ Climate Finance

Countries
World
Sources
AfDB
+ 6 more
Publication date
Origin
View original

Executive Summary

This tenth edition of the Joint Report on Multilateral Development Banks’ Climate Finance is an overview of climate finance committed in 2020 by the African Development Bank (AfDB), the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDBG), the Islamic Development Bank (IsDB) and the World Bank Group (WBG). This year’s report summarises information on climate finance tracking from the New Development Bank (NDB), presented separately from the joint figures. NDB climate finance commitments are not yet included in the total MDB climate finance reported in this year’s edition.

The data and statistics presented in this year’s report result from the uniform application of the methodologies developed jointly by the MDBs for their annual commitments.

In this report, the term “MDB climate finance” refers to the financial resources (from own accounts 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.

The term “climate co-finance” refers to the volume of financial resources invested by other public and private external parties alongside MDBs for climate mitigation and adaptation activities. The MDBs have reported jointly on climate finance since the first edition in 2012, which reported figures for 2011, and have added joint reporting on climate co-finance since the 2015 edition.

In total, the MDBs committed US$ 66,045 million in climate finance in 2020 – US$ 49,945 million or 76 per cent of this total for climate change mitigation finance and US$ 16,100 million or 24 per cent for climate change adaptation finance. The net total climate co-finance committed during 2020 alongside MDB resources was US$ 85,084 million. Together, MDB climate finance and climate co-finance totalled US$ 151,129 million.

The MDB climate finance commitments are presented separately in two main groups: 1) low-income and middle-income economies, a grouping that includes upper-middle, lower-middle and low-income economies, and 2) high-income economies. MDBs made an attempt to attribute climate finance in the category of global, multiregional projects to specific income groups; when such attribution was not possible, they used a pro-rata approach. In 2020, US$ 38,009 million or 58 per cent of total MDB commitments was for low-income and middle-income economies and US$ 28,036 million or 42 per cent for high-income economies. See Figure 2 for the breakdown of climate finance by income group per institution. The economies are categorised by income grouping in accordance with the World Bank’s classification dated June 2020 (see Table A.F.1).

Figure 1 presents MDB climate finance commitments reported for 2015-18 for emerging and developing economies and for 2019-20 for all economies in which the MDBs operate. Figure 2 shows a more detailed breakdown of total MDB climate finance commitments in 2020 by MDB and by income group. Figure 3 outlines MDB climate finance commitments by income grouping, with the inclusion of total MDB climate finance for high-income economies that was not reported in the 2015-18 editions of the Joint Report on MDBs’ Climate Finance.

MDBs apply two distinct methodologies – with fundamentally different approaches – to track climate change adaptation finance (or “adaptation finance”) and to track 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. The methodology for tracking adaptation finance attempts to capture the incremental cost of adaptation activities. In July 2015 the MDBs and the IDFC agreed an initial set of the Common Principles for Climate Adaptation Finance Tracking. The organisations continue to harmonise their approaches to tracking adaptation finance. Climate change adaptation finance in 2020 totalled US$ 16,100 million, of which 83 per cent was directed at low- and middle-income economies.

The MDBs’ methodologies for tracking climate mitigation finance align with the Common Principles for Climate Change Mitigation Finance Tracking that the MDBs and the IDFC jointly agreed and first published in March 2015. At COP24 in 2018 they announced a plan to work jointly to review and strengthen the Common Principles for Climate Mitigation Finance Tracking. In contrast to adaptation finance, 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 emissions and are compatible with low-emission development. In 2020, the MDBs finalised their review of the methodology for tracking mitigation climate finance and commenced tracking using the new methodology on 1 January 2021 for the AfDB, ADB, AIIB, EBRD, EIB, IDBG, IsDB and NDB and on 1 July 2021 for the WBG, to coincide with each institution’s new fiscal year. The new version of the methodology will include a more granular breakdown of types of eligible activity, clear criteria that must be met and additional guidance to help interpretation. Climate change mitigation finance in 2020 totalled US$ 49,945 million, of which 49 per cent was directed at low-income and middle-income economies.

In addition to reporting on mitigation and adaptation finance, some MDBs report on volumes of climate finance that have dual, simultaneous benefits: reducing GHGs and promoting adaptation to climate change. In 2020, the AIIB, EBRD and IDBG reported a total of US$ 795 million for dual-benefit projects. See Annex D for further climate finance statistics and examples of such projects. Given the relatively smaller volumes of “dual-benefit” climate finance and in order to simplify data presentation the tables (see notes to Table 3) and graphs throughout this report present data by mitigation or adaptation finance, as indicated by the reporting MDBs.

Table 1 presents data on MDB climate finance by type of recipient or borrower, in other words, those to whom finance flows directly from the MDBs, as either public and private recipients or borrowers. In 2020, MDBs reported US$ 46,687 million of their climate finance as being for public entities and US$ 19,358 million for private entities.

The NDB applied the joint MDB methodologies for tracking climate mitigation and adaptation finance to its 2020 projects financed from its own account, including sovereign-backed and non-sovereignbacked financing.

In 2020, NDB committed a total of US$ 816 million in climate finance, all of which was directed to middleincome economies. Climate finance accounted for approximately 19 per cent of the NDB’s total approved financing excluding the NDB’s support in response to the Covid-19 pandemic. All of the committed climate finance was dedicated to climate mitigation activities. On a separate note, the NDB approved about US$ 6 billion in emergency assistance to facilitate countries’ fight against the pandemic. The NDB intends to report on the details of its climate financing (for example, by region, sector and instrument) in future editions of the Joint Report, as the NDB extends its application of the joint MDB methodologies.

Asian Development Bank: © Asian Development Bank