Climate deadlines are fast approaching but the world is still a long way from raising the $100 billion a year needed to help developing countries cope with the effects of climate change. Multilateral development banks play an important role in deploying scarce resources and leveraging more investments for climate action, but how much of these funds are going to the most vulnerable countries and regions?
The latest annual joint report on climate finance, released by six MDBs, revealed that the banks committed a combined $28.3 billion toward climate change mitigation and adaptation initiatives in 2014, up 19 percent from the $23.8 billion they obligated the year before. The amount set aside for climate action constituted 22 percent of total MDB funds mobilized by the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank and World Bank Group. Of the total amount, 91 percent came from the MDBs’ own resources while the rest was sourced from a mix of bilateral and multilateral instruments, including the Global Environment Facility and Climate Investment Funds.
Among the MDBs, IDB made the biggest jump in committed climate finance compared with the year before — having more than doubled its funds from $1.2 billion to $2.5 billion. AfDB also set aside 59 percent more for climate finance in 2014, committing $1.9 billion. But while the World Bank Group posted a 37 percent increase in climate commitments, its private sector arm — the International Finance Corp. — showed a slight decrease of 4 percent. ADB, on the other hand, set aside 13 percent less for climate finance in 2014 than it did in 2013.
Two-thirds of total climate finance from MDBs in 2014 went to public recipients and borrowers. For the first time, the banks included types of financial instruments in their joint report as well, revealing that loans made up most of their climate finance at 83 percent. IDB and the World Bank also provided development resources in the form of policy-based instruments, which are “fast-disbursing financial instruments provided to the national budget in the form of loans or grants together with associated policy dialogue and economic and sector work in support of policy and institutional reforms.”