Banks will expand financing for mitigation

The Multilateral Development Banks (MDBs) announced that they will maintain their commitment to expand their support to countries seeking financing to mitigate climate change and adapt to a warming planet.

“On all continents, climate change is having increasingly serious environmental, social and economic impacts, posing a significant and urgent challenge to development and the achievement of the SDGs. [Objetivos de Desarrollo Sostenible de las Naciones Unidas para 2030]”, says the BMD statement.

He adds that the current global context characterized by multiple shocks, high risks and limited public resources is exacerbating the challenge, particularly for developing countries.

Maintaining a vigorous momentum on climate action, the statement continued, requires all parties involved – governments, MDBs and actors from across society – to work together on the development and implementation of impactful programs and projects, appropriate public policies and a significant increase financing from multiple sources.

The MDBs committed to expanding support to countries and other clients to integrate climate mitigation and adaptation into their overall economic planning, from long-term strategies and Nationally Determined Contributions to sectoral and subsectoral transition pathways; policy formulation to stimulate systemic change; and the definition of investment plans and mobilization of financing sources.

The MDBs, which are working with a growing number of countries, regions and cities to develop programs that address climate mitigation, climate resilience and adaptation, and “nature-positive” needs, will prioritize: implementing measures to drive alignment with the Paris Agreements Integrate Just Transition efforts to ensure that the green transition provides opportunities for all Boost financing for adaptation, especially for low-income countries, small island developing States and disadvantaged populations.

climate finance

The MDBs, the main providers and conduits of climate finance globally, met their collective expectation for 2025, formulated in 2019, to increase their financing volumes ahead of schedule, as can be seen in their Joint Report on Climate Finance of the MDBs 2021.

Of their total climate finance last year, $51 billion went to low- and middle-income countries, of which $33 billion (65%) was for mitigation and $18 billion (35%) for adaptation; US$31 billion went to high-income countries, of which 95% went to mitigation and 5% to adaptation. Another US$41 billion of private financing was mobilized globally.

In 2021, IDB Group financing to Latin American and Caribbean countries (of all income levels) reached a total of $5.6 billion, of which $4.5 billion was contributed by the IDB to the public sector; $1.1 billion by IDB Invest to the private sector (only long-term financing is included in the joint report); and $23 million by IDB Lab to innovative projects.

According to the IDB, several small island and low-lying coastal states in the region are critically vulnerable to climate change, regardless of their income level.

pilar.martinez@eleconomista.mx