An increase of more than 20 percent from the previous year, boosting projects that help developing countries cut emissions and address climate risks
Climate financing by the world’s six largest multilateral development banks (MDBs) rose to a seven-year high of $35.2 billion in 2017, up more than 20 percent from the previous year.
The MDBs’ latest joint report on climate financing said $27.9 billion, or 79 percent of the 2017 total, was devoted to climate mitigation projects that aim to reduce harmful emissions and slow down global warming.
The remaining 21 percent or $7.4 billion of financing for emerging and developing nations was invested in climate adaptation projects that help economies deal with the effects of climate change such as unusual levels of rain, worsening droughts and extreme weather events.
In 2016, climate financing from the MDBs had totalled $27.4 billion.
The latest MDB climate finance figures are detailed in the 2017 Joint Report on Multilateral Development Banks’ Climate Finance, combining data from the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank Group (IDB and IDB Invest) and the World Bank Group (World Bank, IFC and MIGA). These banks account for the vast majority of multilateral development finance. In October 2017 the Islamic Development Bank joined the MDB climate finance tracking groups and their climate finance figures will be included in reports from 2018 onwards.
Climate funds such as the Climate Investment Funds (CIF), the Global Environment Facility (GEF) Trust Fund, the Global Energy Efficiency and Renewable Energy Fund (GEEREF), the European Union’s funds for Climate Action and others have also played an important role in boosting MDB climate finance. In addition to the $35.2 billion of multilateral development finance, the same adaptation and mitigation projects attracted an additional $51.7 billion from other sources of financing last year.
Of the 2017 total, 81 percent was provided as investment loans. Other types of financial instruments included policy-based lending, grants, guarantees, equity and lines of credit. Juan Pablo Bonilla, Manager of the Climate Change and Sustainability Sector from the IDB explains, “The Inter-American Development Bank Group channelled nearly $800 million principally to increase resilience of water-related operations and other built infrastructure. To seize opportunities afforded by the region’s vast renewable energy resources, the IDB Group made available nearly $3.5 billion in 2017 to deploy solar and wind energy, improve energy efficiency, and support policy shifts towards decarbonized energy.”
Latin America, Sub-Saharan Africa and East Asia and the Pacific were the three major developing regions receiving the funds. The report contains a breakdown of climate finance by country. Gema Sacristán, Chief Investment Officer from IDB Invest states, “In 2017, Latin America and Caribbean ranked highest among world regions accessing MDB climate finance. This represents an unprecedented and steady increase for the Latin America and Caribbean region over the last two years, with the IDB Group as the region’s partner of choice for investing sustainably in the region.”
The sharp increase came in response to the ever more pressing challenge of climate change. Calls to galvanise climate finance were at the heart of events such as the One Planet Summit in Paris in December 2017, two years after the historic Paris Agreement was adopted. Multilateral banks began publishing their climate investment in developing countries and emerging economies jointly in 2011 and in 2015, MDBs and the International Development Finance Club agreed joint principles for tracking climate adaptation and mitigation finance.
Climate finance addresses the specific financial flows for climate change mitigation and adaptation activities. These activities contribute to make MDB finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development, in line with the Paris Agreement. The MDBs are currently working on the development of more specific approaches to reporting their activities and how they are aligned with the objectives of the Paris Agreement.
You can download the MDB’s latest joint report on climate financing here.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
About IDB Invest
IDB Invest, the private sector institution of the Inter-American Development Bank (IDB) Group, is a multilateral development bank committed to supporting Latin America and the Caribbean businesses. It finances sustainable enterprises and projects to achieve financial results that maximize economic, social and environmental development for the region. With a current portfolio of $11.2 billion under management and 330 clients in 23 countries, IDB Invest works across sectors to provide innovative financial solutions and advisory services that meet the evolving demands of its clients. As of November 2017, IDB Invest is the trade name of the Inter-American Investment Corporation.