Multilateral Development Banks Provided $27 Billion in Climate Finance in 2012

The six large multilateral development banks delivered US$27 billion in financing last year to help countries mitigate and adapt to the challenges of climate change. The largest share, 47 percent of the total, came through the World Bank Group.  

Together, the six banks provided $21 billion dedicated to mitigation efforts and $6 billion for adaptation work, their annual joint report on climate finance shows. Renewable energy and energy efficiency projects led the mitigation investments, receiving 52 percent of the mitigation funds, at $7.5 billion and $3.5 billion respectively.

 “As multilateral development banks (MDBs), we are in the business of using our balance sheets to demonstrate how low-carbon growth can take hold, how private finance can be mobilized, and how climate finance can be deployed to maximum impact,” said World Bank Vice President for Sustainable Development Rachel Kyte, who oversees the World Bank’s work in climate change and resilience.

 “We help set regulatory regimes that ensure finance will flow, and we invest in resilience. This $27 billion investment demonstrates the combined power of partnerships and the value we place on climate action,” she said.

The second Joint Report on MDB Climate Finance follows a newly developed joint MDB approach for climate finance reporting, built on the premise that climate finance and development are closely aligned. The approach classifies projects as either adaptation or mitigation, to avoid double-counting, and counts only the components of projects directly providing mitigation or adaptation co-benefits. Bilateral and multilater donors, such as the Global Environment Facility, accounted for about 8 percent of the total. The MDBs also have additional projects not incorporated into joint reporting, so the totals are smaller than the actual investments.

Adaptation finance

The largest share of adaptation finance came through the World Bank Group:  67 percent, or $4 billion, of the total MDB adaptation investment reported. The number is actually higher. The International Finance Corporation, the World Bank Group’s private sector arm, provides funding for adaptation, but its investments were not included in the fiscal year 2012 numbers; the IFC began tracking using the MDB’s joint approach for reporting in fiscal year 2013.

Among the regions, Sub-Saharan Africa, where food and water security are at risk in a warming climate and low-lying coastal cities face a risk from rising sea levels, received the largest share of the total funding for adaptation, at 31 percent. The South Asia, Latin America and the Caribbean, and East Asia and the Pacific regions received 21 percent, 19 percent, and 18 percent respectively.

About one-third of the total in adaptation funding went into agriculture and ecological resource projects, and just over one-third went into projects involving infrastructure, energy, and the built environment.

Mitigation finance

The World Bank Group provided 42 percent of the total funding for the mitigation activities accounted for in the report, about $8.7 billion.

Renewable energy was the most common mitigation project, drawing 36% of the funding, or $7.5 billion. Energy efficiency accounted for 17 percent, or $3.5 billion. The banks also invested heavily in sustainable transport, at $4.7 million, or 23 percent of the total.

Among the regions, 18 percent of the mitigation funding went to projects in Latin America and the Caribbean; 18 percent to Europe and Central Asia; 15 percent to East Asia the Pacific; 12 percent to South Asia; and 9 percent to each Sub-Saharan Africa and the Middle East and North Africa.

 “The international community recognizes the need to join forces to avert dangerous climate change,” the six multilateral development banks wrote in the report.  In addition to the World Bank Group, they include the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, and the Inter-American Development Bank.