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MDBs report: $74.7 bn out of record climate finance at $125 bn went to low, middle income economies
A recent report by the Multilateral development banks (MDBs) said $74.7 billion out of record climate finance at $125 billion went to low and middle income economies in 2023.
About 67% ( or $50 billion) of the total 74,7 billion was for climate change mitigation finance and 33% (or $24.7 billion) was for climate change adaptation finance.
In 2023, MDBs reported $59 billion of their climate finance for public recipients and $15.7 billion for private recipients in low- and middle-income economies.
The report also showed that MDB climate finance investments in low- and middle-income economies are supported by a total of $68.8 billion for climate co-finance, with 72.8% in mitigation activities and 27.2% in adaptation activities. 58.5% of climate co-finance in low-and middle-income economies came from public sources and 41.5% from private sources
As for high-income economies, $50.3 billion was allocated in 2023 for high-income economies. $47.3 billion or 94% of this total was for climate change mitigation finance and $3 billion or 6% was for climate change adaptation finance.
In 2023, the multilateral development banks reported $26.9 billion of their climate finance for public recipients and $23.4 billion for private recipients in high-income economies.
The report also showed that MDB climate finance investments in high-income economies are supported by a total of $103 billion for climate co-finance, with 97% in mitigation activities and 3% for adaptation activities. 29.5% of climate co-finance in high-income economies came from public sources and 70.5% from private sources.
It is worth mentioning that the MDBs issued a high-level statement outlining their joint climate action commitments to 2025 at the UN Secretary General’s Climate Action Summit in New York in September 2019. This included an expected annual collective total of $50billion climate finance for low-income and middle-income economies, and at least $65 billion of climate finance globally, with an expected doubling in adaptation finance to $18 billion; and private mobilization of $40 billion.
As in 2022, in 2023 the MDBs again surpassed these collective expectations on climate finance – both for low- and middle-income economies, and globally. They also notably increased adaptation finance to over $25 billion across all the economies in which the MDBs operate. Despite this, MDB adaptation finance still lags significantly behind mitigation.
The multilateral development banks apply two distinct methodologies – with fundamentally different approaches – to tracking climate change adaptation finance (or “adaptation finance”) and climate change mitigation finance (or “mitigation finance”). Both methodologies, however, track and report climate finance in a granular manner. In other words, the climate finance reported covers only those components and/or sub-components or elements or proportions of projects that directly contribute to or promote adaptation and/or mitigation.
The multilateral development banks estimate adaptation finance using the joint MDB methodology for tracking climate change adaptation finance, which involves a three-step approach. This methodology is based on a context- and location-specific, granular and conservative approach and captures the amounts associated with activities directly linked to vulnerability to climate change.
The banks try as far as possible to differentiate between their usual development finance and finance provided with an explicit intent to reduce vulnerability to climate change. This methodology was updated with a new joint methodology in November 2022.
The organizations continue to harmonize their approaches to tracking adaptation finance. The MDBs’ climate change adaptation finance in 2023 totaled $27.7 billion, of which 89% was directed at low- and middle-income economies.
This 13th edition of the Joint Report on Multilateral Development Banks’ Climate Finance is an overview of climate finance committed in 2023 by the African Development Bank (AfDB), the Asian Development Bank (ADB), 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 (IDBG), the Islamic Development Bank (IsDB), the New Development Bank (NDB) and the World Bank Group (WBG).
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