The world’s climate goals can only be reached with enough high quality financial support. Multilateral development banks (MDBs) have to play a vital role in efforts to shift global finance flows towards a sustainable future.
Each year, these institutions invest around $150 billion, mostly in developing and emerging economies. They also influence the financial decisions of others. By reducing risks associated with individual investments they steer public and private finance towards or away from activities that are vital to the transition to low-carbon and climate resilient economies. Through policy, technical and research support they also help shape the rules that guide public and private investment decisions around the world.
While recognizing the importance of climate finance, this report calls for the MDBs to go further, ensuring that their whole portfolios – not just climate-finance portions – are supportive of the Paris goals, and that MDB-financed projects do not undermine the Paris Agreement.
This joint report by Germanwatch, the World Resources Institute, NewClimate Institute and Fundacion Avina, financed through a grant from the German Federal Ministry of Economic Cooperation and Development, answers the question what it means to invest in a way that is aligned with the Paris climate goals. It provides a comprehensive assessment of the state of play and best practices along with actionable recommendations.
The report aims to support the ongoing efforts by MDBs to achieve alignment between their activities and the global climate goals and to help shareholders and stakeholders to screen projects and strategies for Paris alignment. It can also serve as a discussion basis for the efforts of other financial institutions to align their financial flows.