What do the Paris Alignment and climate finance mean for MDBs?

Climate Finance and Paris Alignment are words on everyone’s lips at COP25 but what does it mean in practice for multilateral development banks? We asked Islamic Development Bank Group (isdb.org), European Bank for Reconstruction and Development (EBRD) and EIB climate experts what they think their role as MDBs is in helping to limit global warming under 1.5°C.

Hello from cop 25 in madrid the un climate conference where the phrases climate finance and paris alignment are on everybody’s lips well nearly at least on the lips of the three guests with me at the moment they represent three of the nine multilateral development bank’s these are the global publicly owned banks that support projects around the world and for all of

Them climate and environmental finance are becoming more and more prioritized well to help us answer the questions what to paris alignment and climate finance mean to you mdbs i’m joined by three people who are actually the heads of their climate action teams monica scott asta who is from my own institution i must declare an interest the european investment bank

We have ahmed el kabbani from the islamic development bank and we have jun piero a nazi from ebrd which is the european bank for reconstruction and development so all of you joining us now do feel free to send us your comments and questions in the course of this and we’ll do our best to try and answer them over the next few days but let me ask you first of all i’ve

Made to what extent can md b’s help to limit global warming to below 1.5 degrees thank you sure you thank you well the multilateral development bank’s actually have a key role as you rightly said we are owned by the government’s the government’s are key stakeholders what we’ve been doing for the past few years and now with this new tires alignment engagement that

We have we’ve been working closely with the governments the ministries lion ministries and our member countries in order to develop the national pants low-carbon development plans no carbon and resilient without confirms to make sure that climate change is mainstream properly international development and working with them and developing how these plans actually

Incorporate climate change in terms of adapting to the risks and also making use of the opportunities that climate change actually brings to these functions jump here do you think that mdbs can actually set the agenda themselves i think so i think we’ve been demonstrating over more than a decade of working together that we have the capacity to influence the way the

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Financial sector is shaping up it’s kind of standard and it’s out to say approaches to economic finance we’ve been working together for many years for example in the era of kind of man and slacking and this new development with the police alignment i think will represent a quite significant reference when it comes to the definition of what type of investment the type

Of initiatives and activities that mdbs can promote in order to achieve the objective a price agreement monica we come back in a moment to the to what you’re doing together on the paris alignment but do you think what’s your take on this can mdb set the agenda i think that we can influence the agenda we should be a little bit careful week we can we have to be humble

We do not set the agenda we work with our counterparts with stakeholders with countries but not just countries it’s countries it’s national government local governments it’s a private sector and it’s through that dialogue that a new agenda is emerging what we can also do is show by example and and this is where for instance the new energy lending policy of the ib

Is so important where we’re really committing to actually step out from unabated fossil fuels as of the end of 2021 this is not to say that others cannot continue financing for instance natural gas it is for us to say that as the eu climate bank we make a commitment not to do so and to prioritize the transition to a new future – the only possible future involved

Champion last year at coq 24 in katowice the mdb is u3 but including the six others said that you would come forward with a common framework to help the world but yourselves as well move towards paris alignment have you done it have you kept your promises it’s a good question and a difficult one to answer in we have certainly made a lot of progress in defining

An approach which helped us to identify the solutions and the initiative that determine how our operations are aligned with the paris agreement we’re just coming from a presentation today where we illustrated the way we would like to approach this problem and the way we want to manage this is very complex question and i think we have definitely delivered on the

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Commitment that we made last year because we disclose our joint approach that looks into mitigation and adaptation operations but also the way we are looking at other complex parts of the equation for example the way we’re going to report on progress and also the way we are going to let’s say introduce considerations and society provides element within our internal

Operations taking a step back at mit why does it matter actually for those of you you might say that’s all a bit confusing why does it matter that you have a common approach well as john pierrot mentioned the complexity of this is actually the key thing and i don’t think any of the multilateral banks and on their own or any institution on their own could actually

Have a right answer to this question this is why through our collective experience collective engagement of the countries this is will be working very hard together to developing this framework to address these challenges because it is a complex challenge and i don’t think any institution on its own can be really working with developing meaningful solutions and

The collective action not just of mdbs i think monica mentioned the track you have to be humble our role is to try to give some direction to other financial institutions local financial institutions the government’s on how we think we should plan our development how we shouldn’t we take our development hands forward and how the private finance should be changi

Should be flowing and that’s the key point isn’t it the private finance can i can i jump in i think that for the viewers it would also be important to say okay why does paris alignment in itself matter because for many people it may mean very little what it means what it means is really that we’re not just focusing on financing climate action this is fundamental

We have to accelerate the transition we have to accelerate our investment in those activities such as renewable energy energy efficiency and others that get us there but we also have to proactively step out proactively disengage from certain activities that do not belong in a paris align in future and that is what paris alignment is all about and really we’re

Sending a very strong message by coming together with this with this common vision that we’re not just doing more of what is nice and what supports climb a natural environmental sustainability but we’re moving away proactively while taking into consideration social impacts and this is a fundamental aspect as well and these are not easy decisions are they i mean

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We found that it the eib as well we know that and but how how much do you think there is a momentum in your institutions to be going in that direction they were meant to certainly there and is how to say furthering forced or let’s say there is extra pressure from what we see happening in the world the scientific evidence of you know climate changes is becoming more

And more relevant in what we do and the facts definitely the way we operate and how the policies in our institutions are shaped shaping up i think for us the critical element is not only to work together as financial institutions but very much setting up different partnerships multiple partnerships for greater impact we as a group we have definitely the capacity to

Influence and to to say interact more effectively with these partnerships and to thinking about for example the ng fs or the coalition mister finest for contraction these are all very critical initiatives that have to be supportive and i think we provide not only a good counterpart to work with but also the way to implement and to really bring these considerations

In this policy work into the operations into the investments yes i think to add to that there is a lot of momentum going i think one of the big issues how to make the best out of this momentum and turn it into action on the ground and i think this is this was part of the whole exercise and the whole engagement together and this is why the multilateral development

Bank’s brought their brains together we want to translate this momentum this goodwill then we know there’s a lot of goodwill from different countries different stakeholders developed and developing but how to turn this into action and how to help channel this goodwill into operations and actual investments good place to leave it there and that’s all from me here

At cop 25 and also from our colleagues at the european bank for reconstruction development the islamic development bank and of course the european investment bank thanks all of you bye for now thank you

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What do the Paris Alignment and climate finance mean for MDBs? By European Investment Bank