COP27: MDBs welcome call to scale up climate funding
Multilateral Development Banks react to the final COP27 text, which called on them to scale up climate financing and reform their “practices and priorities”.
Multilateral Development Banks (MDBs) have responded positively to calls in the COP27 implementation plan for the institutions and their shareholders to reform “practices and priorities” and substantially increase climate finance.
The final COP27 text, known as the “cover decision” or the Sharm el-Sheikh Implementation Plan, included a section encouraging MDBs to “define a new vision and commensurate operational models, channels and instruments that are fit for the purpose of adequately addressing the global climate emergency”.
Sir Danny Alexander, the Asian Infrastructure Investment Bank’s (AIIB’s) vice president for strategy and policy, told Net Zero Investor: “The COP27 Sharm El-Sheikh Implementation Plan decision rightly calls on MDBs and their shareholders to act and reform for the scaling up of climate finance and for mobilising finance from various sources.
“I welcome the recognition of the role and responsibility of MDBs in addressing the climate emergency together with the challenge to do more.”
The European Bank for Reconstruction and Development (EBRD) also welcomed the recommendations in the cover decision. It stressed that there was “an urgent need” to accelerate climate funding “because current levels of climate finance fall short of [the] emerging market investment need”.
The EBRD detailed that creating the economic conditions to generate climate finance will require different elements, including ambitious policy commitments in particular countries and strong flows of grant and concessional finance.
“These are areas where MDBs are already active through our policy dialogue and fundraising efforts. We are determined to scale those up further,” an EBRD spokesperson told Net Zero Investor.
Mobilising the private sector
The implementation plan also called on MDBs to “contribute to significantly increasing climate ambition using the breadth of their policy and financial instruments for greater results, including on private capital mobilisation”.
Alexander commented: “The COP declaration rightly conveys the sense of urgency to scale up climate finance from all quarters, and the need for MDBs to use our finance and expertise to help to mobilise others, especially the private sector.”
The AIIB has committed to being Paris Aligned by July 2023 and has a majority shareholding of developing countries.
In its Asian Infrastructure Finance 2022 report, the AIIB highlighted that building Public Private Partnerships (PPPs) in emerging economies is vital to achieving the net-zero transition. It suggested that this was because PPPs reinforce finance, technology and infrastructure in emerging countries.
Alexander added that in light of the COP27 implementation plan: “We aim to build on our record of doubling our climate finance from 2020 to 2021 by further diversifying the instruments in our toolkit, expanding public and private partnerships, and mobilising more private sector finance too.”