Multilateral Banks Boost Climate Finance to Record $125 Billion in 2023, Doubling Private Sector Mobilization

Multilateral Banks Boost Climate Finance to Record $125 Billion in 2023, Doubling Private Sector Mobilization

(IN BRIEF) Multilateral development banks (MDBs) have reached a new milestone in climate finance, committing a record $125 billion in 2023. A significant portion, $74.7 billion, was allocated to low- and middle-income countries, primarily for climate mitigation and adaptation. High-income economies received $50.3 billion, with private sector mobilization nearly doubling to $101 billion globally. This announcement, ahead of COP29 in Baku, highlights the critical role MDBs are playing in driving global climate action, aiming to meet the Paris Agreement goals. The European Investment Bank (EIB) played a key role, contributing $42.1 billion in high-income nations and mobilizing $53 billion in private finance.

(PRESS RELEASE) LUXEMBOURG, 21-Sep-2024 — /EuropaWire/ — In a notable achievement for climate action, multilateral development banks (MDBs) have reported a record-breaking $125 billion in global climate finance for the year 2023. This substantial figure, announced today, highlights a continued rise in climate-related funding efforts, more than doubling the amount from 2019. This increase aligns with the MDBs’ long-standing commitment to scaling up climate finance, a goal first outlined during the UN Secretary-General’s Climate Action Summit.

Climate Support for Low- and Middle-Income Nations

A significant portion of this funding—$74.7 billion—was directed to low- and middle-income countries, where the challenges of climate change are often felt more acutely. Of this total, the majority (67%, or $50 billion) was dedicated to mitigating the effects of climate change, while $24.7 billion (33%) focused on climate adaptation strategies. In addition, MDBs succeeded in mobilizing $28.5 billion in private finance to support climate initiatives in these regions.

High-Income Nations Also Receive Support

MDBs also provided substantial financing for high-income economies, with a total of $50.3 billion. A striking 94% of this amount ($47.3 billion) went towards climate change mitigation, with the remaining 6% ($3 billion) allocated for adaptation projects. Private finance mobilization for these wealthier nations surged to $72.7 billion, reflecting a nearly twofold increase compared to 2022.

Climate Finance at the Forefront Ahead of COP29

This announcement comes as anticipation builds for the 29th Conference of the Parties (COP29) to the United Nations Climate Change Conference, scheduled for November 2024 in Baku, Azerbaijan. One of the primary objectives of COP29 is to solidify global climate finance commitments, with discussions centered on a new collective quantified goal for climate finance.

Speaking on the latest figures, EIB Vice-President Ambroise Fayolle remarked: “As we approach the halfway point of this critical decade, we must intensify our efforts to ensure that the Paris Agreement goal of limiting global warming to 1.5°C remains achievable. Since 2019, multilateral development banks have consistently increased climate financing, exceeding our joint targets. Our coordinated work is driving meaningful results, not just for climate mitigation but also for adaptation and disaster risk management, particularly for those transitioning away from fossil fuels. With $125 billion in climate finance this year, we are reinforcing the message that MDBs are pivotal in accelerating global climate action.”

The European Investment Bank (EIB) played a substantial role in the MDBs’ collective effort, providing $42.1 billion for climate finance in high-income economies and $4 billion for low- and middle-income nations through EIB Global, its specialized development arm. The bank also mobilized a remarkable $53 billion in global private finance.

Ensuring Transparency in Climate Finance Reporting

The figures for 2023 were published as part of the Joint Report on Multilateral Development Banks’ Climate Finance, an annual effort to transparently track and share MDB climate finance data. This report, coordinated by the EIB, provides detailed methodologies for how MDBs calculate and monitor their climate finance contributions. Data from various MDBs, including the African Development Bank, Asian Development Bank, and the World Bank Group, were included to give a comprehensive picture of the global response to climate financing needs.

This latest report underscores the MDBs’ growing ambition in the climate space, building on earlier commitments made during COP21 and the post-2020 period. The rising figures reflect the urgent need for increased climate finance as the global community strives to meet its climate goals.

Background information

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It is active in more than 160 countries and makes long-term finance available for sound investment in order to contribute towards EU policy goals.

• In 2019, the EIB’s updated Energy Lending Policy was adopted to end financing to any unabated fossil fuels energy projects, including natural gas, the first MDB to do so.
• In 2021, the EIB became the first MDB to align its financial activities with the Paris Agreement.
• Through its Climate Bank Roadmap the EIB Group aims to support €1 trillion of investment in climate action and environmental sustainability through the critical decade, 2021-2030.
• With a commitment to increase investment in climate action and environmental sustainability to more than 50% of the EIB’s annual lending by 2025 – last year that was exceeded with 60%.

EIB Global is the EIB Group’s specialised arm dedicated to increasing the impact of international partnerships and development finance.  EIB Global is designed to foster strong, focused partnership within Team Europe, alongside fellow development finance institutions, and civil society. EIB Global brings the Group closer to local people, companies and institutions through our offices across the world.

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SOURCE: European Investment Bank