Major multilateral development banks (MDBs) increased their commitments to climate finance to US$66 billion in 2020 in comparison to US$61.6 billion in 2019 according to the 2020 Joint Report on MDBs’ Climate Finance. At the same time, the commitments to low- and middle-income economies decreased compared to 2019.
According to the report, in 2020 MDBs committed 58% – or US$38 billion – of the total US$66 billion to low- and middle-income economies. This is 9% less than in 2019 when these economies received 67% of the total US$61.6 billion which amounted to US$41.5 billion.
European Investment Bank Vice-President, Ambroise Fayolle, remarked in the report: “To solve the climate crisis, we must mobilize trillions of dollars. Today’s report shows that, despite the COVID-19 pandemic, MDBs provided crucial support to countries worldwide to build back better for a greener future. Importantly, MDB climate finance helped leverage important funding from other sources, including from the private sector. At the EIB, we are delighted to report record climate finance for 2020. Despite still much work to do in this area, we saw an important and encouraging step up in our support for climate change adaptation, which in 2020 doubled compared to previous years.”
The report noted that MDBs dedicated 76% of the total amount, US$49,945 million, to climate change mitigation finance, aiming to decrease dangerous greenhouse gas emissions and reduce global warming, while 24%, US$16,100 million, was committed to climate change adaptation finance, to support economies to build resilience to the mounting effects of climate change.
Fig.1. Total MDB climate finance commitments for all economies where the MDBs operate, 2020 (in US$ million)
MDB climate finance by region, 2020
As MDBs align their activities with the objectives of the 2015 Paris Agreement on climate change, over the past six years, MDBs have allocated US$257 billion in climate finance, with US$186 billion committed to low- and middle-income economies.
Fig.2. Total climate finance by region, US$66,045 million
Officer-in-Charge Director of Climate Change and Green Growth at the African Development Bank, Al-Hamndou Dorsouma, noted: “The African Development Bank’s share of climate change-related investments has increased four-fold from 2016 to 2019 and is expected to reach 40% of the Bank’s total investment at the end of 2021. We are on track to mobilize the target of US$25 billion between 2020 and 2025 to support investments that address climate change and promote green growth.”
The Paris Agreement, the first legally binding global climate change agreement, provides for limiting global warming to well below 2°C and making efforts to limit this to 1.5°C. During the UN Secretary-General’s Climate Action Summit in 2019, MDBs declared their projected annual climate action finance to 2025, with an expected US$65 billion funding of which US$50 billion was intended for low-income and middle-income countries.
