A group of multilateral development banks (MDBs), including the IsDB, have launched a series of joint principles to ensure their new financing activities are aligned with the Paris Agreement. The principles are expected to harmonize approach to the sustainability considerations of MDB financing.
The joint methodological principles include guidelines on direct investment lending, intermediate financing, general corporate financing and policy-based lending.
“The MDBs’ joint Paris Alignment approach aims to accelerate and support the successful and urgent transition to a low-carbon and climate-resilient future by supporting clients to develop appropriate short-term and longer-term development pathways…,” the Asian Infrastructure Investment Bank (AIIB) said in a statement.
The methodological principles were developed in a collaboration between 10 MDBs including the IsDB, the AIIB, the Asian Development Bank, the African Development Bank and the World Bank Group.
Notably, under the principles on direct investment lending, MDBs need to assess the broader context for climate resilience. They are required to consider if their lending operations are consistent with relevant policies, strategies and private sector priorities for climate adaptation and resilience.
According to the World Bank Group, the principles have been developed through ongoing piloting work over the past two years.
“Building on these joint MDB principles, MDBs have developed their own methodological guidance and toolkits to be applied according to their internal processes and procedures to determine whether an operation is ‘aligned’ or ‘not aligned’ with the mitigation and adaptation goals of the Paris Agreement,” the World Bank Group said in a statement.
The assessment principles are expected to be modified and refined as the MDBs adopt and implement them at the institutional level.
The publication of the technical papers follows a joint framework established in 2019, which focuses on ensuring the alignment among MDBs on climate mitigation goals, climate-resilient operations as well as the accelerated contribution to the transition through climate finance, among others.