How multilateral development banks are adapting to climate adaptation

Devex has long covered development banks’ struggle to find profit-making climate adaptation projects that tackle the effects of climate change rather than try to mitigate carbon dioxide emissions. Back in 2021, the European Investment Bank set a target of allocating 15% of its climate finance to adaptation by 2025, for instance. But it’s been slow going, with the bank moving the needle only slightly from 4.9% in 2021 to 6.4% in 2023 as adaptation efforts struggle to keep pace with increased funding for mitigation. And for now, the European Bank for Reconstruction and Development does not have an adaptation target at all. On Tuesday at Devex’s Climate + Finance event in London, we asked the bank’s President Odile Renaud-Basso: why not? Though the bank’s climate adaptation numbers are going up, and the ambition is to do more, Renaud-Basso told Devex’s U.K. correspondent Rob Merrick that “we are still in the sort of learning-mode and developing kinds of tools so that’s why we don’t have this target yet.” “It’s challenging for us because we are a bank which is focusing mainly on the private sector, and so it’s quite challenging to develop [the] business model and so forth with adaptation,” she said. The Asian Development Bank announced $4.3 billion in adaptation finance last year, nearly 44% of its total climate finance. But that came mostly in the form of sovereign loans, raising concerns over countries’ debt burden. Renaud-Basso said that for now most of EBRD’s adaptation work is also through the public sector — though she added “we are working on how to develop private sector financing in this area.” EBRD will next year begin investing for the first time in sub-Saharan Africa. “We believe that adaptation is a big challenge there,” Renaud-Basso said, “and will probably be a bigger focus for us in the years to come.”