Multilateral Development Banks Join Forces to Track Climate Financing
The African Development Bank led a team of Multilateral Development Banks (MDBs) to develop a new joint approach to track climate financing including Adaptation and Mitigation Financing. The reports were launched during a side event panel at the UN Climate Change Conference (COP18) in Doha on December 5.
The new common methodology to track climate financing and value its impact was launched during a panel discussion on the topic, featuring representatives from each of the MDBs involved – the AfDB, Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IDB), International Finance Corporation (IFC) and the World Bank.
Simon Mizrahi, Director of the AfDB’s Quality Assurance and Results Department (ORQR), expressed the urgent need to take on climate financing and its tracking and make it a moral obligation. “Climate change is already taxing the lives and future of millions of people in Africa specifically, as they will be the hardest hit. Drought, storms, floods are destroying the livelihood of millions in the most vulnerable countries on earth,” Mizrahi continued. “Addressing climate change needs a worldwide team effort as the numbers are staggering and a collective partnership is the only way forward.”
AfDB Chief Climate Change Specialist Mafalda Duarte introduced the joint MDB reports on Adaptation and Mitigation Finance and how these will support better project design and allow better accountability to stakeholders, whether they be member countries, institutions or private donors. “Commitments have been made in terms of climate finance because of the recognition that climate finance is needed to address the climate change impacts we are facing and we will face,” Duarte said. “These joint reports provide a system to monitor these commitment trends and progresses, in climate-related investments. -We believe also that this tracking and monitoring will mobilize resources from capital markets into green investments and will also define what these investments are going to be.”
Claudio Alatorre, Senior Climate Change Specialist with the IDB, expressed the simple idea behind these systems: “We are putting the planet on a diet and we, the joint MDBs, are building the menu for the diet. The focus is low-carbon development activities.”
The MDB representatives all agreed that the process of harmonizing their tracking methodologies is allowing them to build momentum in tackling the negative effects of climate change. But this joint effort is the beginning of a long process with many challenges ahead. One of those key challenges will be to leverage private investments in climate financing, which is not yet happening.
The collaborative work initiated by the African Development Bank “is a real achievement and the first of its kind,” said Simon Brooks, Vice-President responsible for Environment and Climate Action at the EIB.
The MDBs expressed their commitment to continue this process as their collaboration goes from strength to strength. “We don’t measure our success by the money we make, but by the lasting changes we make,” concluded Thomas Kerr, Director of Climate Change Initiatives at the World Economic Forum, who moderated the meeting.
The international community recognizes the need to join forces to avert dangerous climate change impacts. This requires mobilizing financial resources from a wide range of sources, public and private, bilateral and multilateral, including alternative sources. It is increasingly important to track and report financial flows that support climate change mitigation and adaptation, to build trust and accountability with regard to climate finance commitments and monitor trends and progress in climate-related investment. Yet there is currently no precise internationally agreed definition of climate finance and current efforts to track climate finance lack transparency, comparability and comprehensiveness.
In order to address this problem as far as the Multilateral Development Banks (MDBs) are concerned, in early 2011, the Vice-Presidents of the MDBs agreed to undertake joint efforts leading towards developing a joint methodology for tracking climate change mitigation and adaptation finance. An MDB working group on climate finance tracking was established, with the IDB coordinating efforts on mitigation and the AfDB coordinating efforts on adaptation. The Joint MDB methodology for mitigation finance tracking along with the 2011 financing figures were prepared and disseminated during Rio+20. MDBs under the leadership of AfDB have been engaged in a parallel effort to develop a joint approach for adaptation finance tracking that was presented and discussed at the side event in Doha.