Multilateral development banks (MDBs) released an operational framework on 19 June that aligns with the Paris Agreement which took over five years to create.
The framework has six guiding principles: alignment with mitigation goals; adaptation and climate-resilient operations; accelerated contribution to the transition through climate finance; engagement and policy-development support; reporting; and alignment of internal activities.
In 2017, MDBs agreed to align their financial flows with the Paris Agreement objectives. The principles are designed to help facilitate a successful green transition.
“These principles are central to our own Paris alignment commitment, which aims to support the clients and countries with whom we work in delivering a green economy transition,” said Harry Boyd-Carpenter, managing director of climate strategy at the European Bank for Reconstruction and Development (EBRD).
The MDBs that worked on creating the framework include EBRD, the African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, Council of Europe Development Bank, European Investment Bank, Inter-American Development Bank Group, Islamic Development Bank, New Development Bank, and the World Bank Group.
Barbados prime minister Mia Amor Mottley and European Investment Bank president Werner Hoyer recently said that MDBs can play a large part in helping developing countries respond to climate change.
“Multilateral development banks (MDBs) have a unique role to play in the global mission to prevent and respond to climate change and pandemics… better integration with the broader set of public development banks – including national ones, which collectively lend more than $2 trillion per year – could further improve the effectiveness of existing lending,” the two stated.
Economists estimate that the developing world needs at least US$350bn more per year in financing against climate and pandemic risks. The Philippines recently took out a US$750mn loan from the World Bank to support policy reforms aimed at environmental protection and climate resilience.
Financial experts and climate activists have said more funding is needed to help with a just transition. Some favour debt-for-climate swaps, while others have argued that special drawing rights (SDRs) are needed to facilitate a green economy.
This page was last updated June 29, 2023
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