How can Multilateral Development Bank financing be further aligned with our commitments to combat the climate crisis? How can they lead the transition to climate neutral and resilient economies in every part of the world?
If the world is to meet our commitments under the Paris Agreement, we must align all financial flows, public and private, with climate resilient and net zero development. There is still much work to do to bring the Multilateral Development Banks (MDBs) in particular into alignment with our global climate goals. The world’s ten leading MDBs have committed to delivering Paris alignment. What shifts need to take place to deliver this, and how can we ensure that all public banks implement an ambitious agenda on climate change? And most importantly, how can we ensure that these banks have sufficient financial firepower to empower countries to invest in greener and more resilient development? This event brought together government representatives and key experts to discuss all these questions and more.
There was consensus that by 2025-27 the MDBs need to massively increase the scale and the pace of their activities to address the global gaps in finance for both mitigation and adaptation and deliver the 45% reductions in global emissions that is required by 2030.
Participants agreed that there is a clear need to deliver the scaling up and mainstreaming of climate in all MDB lending, operations and governance, to ensure MDBs play a proactive and transformational role in delivering on the Paris Agreement and an alternative pathway to sustainable development for recipient countries.
Work should take place at every level – political and technical – to coordinate and exchange best practices in this space.
The workshop discussed the importance of the World Bank Evolution Roadmap, the G20 MDB Capital Adequacy Review, innovative MDB adaptation finance, World Bank Country Climate and Development Reports, Loss & Damage finance, fossil fuel projects, the new post-2025 New Collective Quantified Goal and Just Energy Transition Partnerships.
Key milestones on the road ahead
- The group discussed the need for a leader-level meeting to connect Global North and Global South on these issues in 2023.
- The Bridgetown Initiative and the World Bank Evolution Roadmap were seen as key processes to engage with.
- It was agreed that there is a need for a clearer understanding of how the MDB system will contribute to the increased financing needed to incentivise more ambitious Nationally Determined Contributions (NDCs) by 2024 within the United Nations Framework Convention on Climate Change (UNFCCC) process.
There was also a general discussion of the political economy of the MDBs and the role of the European Union in the MDB policy space
In partnership with E3G