Multilateral development banks (MDBs) recently issued a joint statement at COP29 in Baku, outlining financial support and other measures for countries to achieve ambitious climate outcomes.
A group of development banks, including the World Bank, announced a joint goal of increasing annual collective climate financing for low- and middle-income countries to $120 billion by 2030. This financing also includes $42 billion for adaptation. Multilateral development banks also aim to mobilize $65 billion from the private sector.
The estimates encompass lenders including the Asian Development Bank (ADB), the World Bank Group, the African Development Bank (AfDB), the Asian Infrastructure Investment Bank (AIIB), the Council of Europe Development Bank (CEB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDB), the Islamic Development Bank (IsDB) and New Development Bank.
“While the scale of MDBs’ financial commitments is essential, MDBs’ most significant impact comes from our ability to drive transformative change,” the statement said.
MDBs exceed ambitious 2025 climate finance projections
For high-income countries, the World Bank expects this annual collective climate financing to reach $50 billion, including $7 billion for adaptation. Development banks also aim to mobilize $65 billion from the private sector for high-income countries.
“As emphasized by the Group of Heads of MDBs in the recent Viewpoint Note: MDBs Working as a System for Impact and Scale, we MDBs are focused on amplifying our catalytic effect by enhancing the results and impact of our financing, deepening engagement with countries through platforms, supporting clients’ climate ambitions, and increasing private sector mobilization,” added the statement.
The World Bank also noted that multilateral development banks significantly exceeded their ambitious 2025 climate finance projections set in 2019, with a 25 percent increase in direct climate finance and mobilization for climate efforts doubling over the past year.
“Rallying to the call for urgent climate action, MDBs recognize the central importance of establishing a New Collective Quantified Goal on Climate Finance (NCQG) at COP 29 in Baku. A robust and ambitious NCQG is essential for achieving the goals of the Paris Agreement, and we urge Parties to reach a strong conclusion on this objective,” the statement said.
$720 million pledged to fund for responding to loss and damage
Throughout the year, the COP29 presidency has been supporting the full operationalization of the fund for responding to loss and damage so that it can begin disbursing much-needed and long-awaited funds as soon as possible.
The fund is now ready to accept contributions after the signing of key documents. A ceremony on the second day of COP29 in Baku celebrated the signing of the Trustee Agreement and the Secretariat Hosting Agreement between the Board of the Fund for responding to Loss and Damage and the World Bank, as well as the Host Country Agreement between the Fund Board and the Fund Board’s host country, the Republic of the Philippines. With this important milestone reached, the fund is now expected to start financing projects in 2025.
At the event, Sweden also pledged approximately $19 million to the fund, subject to government approval. This brings the total pledged funding to more than $720 million. The COP29 presidency also launched a new high-level annual dialogue on coordination and complementarity for funding arrangements responding to loss and damage that will bring together stakeholders from within and outside of the UNFCCC process.
COP29 eyes climate financing agreements
COP29 aims to secure a wide-ranging international climate financing agreement that ensures up to trillions of dollars for climate projects. Developing countries are hoping for big commitments from industrialized countries that are the biggest historical contributors to global warming, some of which are also huge producers of fossil fuels.
In 2009, wealthy countries pledged to contribute $100 billion a year to help developing nations transition to clean energy and adapt to the conditions of climate change. However, those payments were only fully met in 2022 and the pledge expires this year.
This year will likely be the warmest on record. June 2024 was the warmest June globally on record with average European temperatures 1.57 °C above the 1991-2020 average for June, reported the EU’s climate change monitoring service. The global average temperature in July 2023 – June 2024 reached the highest on record at 0.76 °C above the 1991-2020 average and 1.64 °C above the 1850-1900 pre-industrial average.
According to the UN, a major priority for negotiators at COP29 will be reaching an agreement on a new climate finance goal that ensures all countries can undertake more robust climate actions, reduce greenhouse gas emissions, and build resilient communities. COP29 aims to unlock the trillions of dollars necessary for developing countries to mitigate harmful emissions, adapt to climate change, and address related losses and damages.
Landmark global warming agreements
At COP21 in Paris in 2015, countries reached a landmark agreement to limit global warming to well below 2 degrees Celsius above pre-industrial levels while striving to keep it to 1.5 degrees.
Last year’s COP28, hosted by the UAE, successfully established a unified global framework for climate priorities through the groundbreaking UAE Consensus and an actionable climate agenda. This initiative encouraged the inclusion of diverse perspectives from around the globe, fostering a new collaborative model for tackling climate challenges and reflecting an innovative vision for unifying global efforts to build resilience and ensure a sustainable future.
For more news on banking & finance, click here.
