Climate financing by the world’s six largest multilateral development banks (MDBs) – the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank Group and the World Bank Group – rose to an all-time high of $43.1bn in 2018, up 22.4% from the previous year, according to the 2018 Joint Report on MDB’s Climate Finance by the six MDBs.
Sub-Saharan Africa, Latin America and the Caribbean and south Asia were the top three developing regions receiving the funds. India received $3.7bn climate finance in 2018, the most out of any country within the year.
The 2018 Joint Report shows that $30.2bn, or 70% of the 2018 total, was devoted to climate change mitigation investments that aim to reduce harmful greenhouse gas emissions and slow global warming.
The remaining $12.9bn, or 30%, was invested in climate adaptation projects for emerging and developing projects to help economies deal with the effects of climate change such as worsening droughts, and more extreme weather events from severe flooding due to rising sea levels.
In addition to the $43.1bn, MDBs reported a further $68.1bn in net climate co-finance from other sources of investment in 2018. When combined with the MDB climate finance, it brings the year’s total climate finance to $111.2bn. Collectively, the six MDBs have committed almost $237bn in climate finance in developing and emerging countries since 2011.
MDBs reported that 71% of total climate finance in 2018 was committed through investment loans. Other types of financial instruments include policy-based financing, grants, guarantee, lines of credit and equity.
The rise in climate financing came in response to the increasingly pressing challenge of climate change. Large parts of the northern hemisphere experienced a succession of heatwaves and saw record high temperatures in numerous countries
At a summit held in Katowice, Poland in December 2018, countries settled on the ‘rulebook’ for putting the 2015 Paris Agreement into practice, including how governments will measure, report and verify their emission-cutting efforts. This led Patricia Espinosa, the UN’s climate change executive secretary, to describe the summit as ‘Paris 2.0’.