| Paris alignment | Reasoning |
|---|---|
| Paris aligned | Mitigation, climate risk and resilience are all well integrated in key sectoral strategies. Almost all strategies and frameworks centre around ensuring climate co-benefits in projects related to mitigation and resilience. |
| Mitigation | Resilience | |
|---|---|---|
| Energy | Climate mitigation is one of the main priorities under the strategy. AFD primarily achieves a modernised and decarbonised energy supply through promotion of renewable energy. So far, AFD has not financed any green hydrogen projects. It will soon publish a study summarising its positioning and strategy in this matter. | The strategy emphasises and demonstrates the need for climate resilient energy infrastructure to achieve goals linked to energy access. |
| Transport | Two of the four main goals of the strategy are linked to climate mitigation. Most AFD projects in this sector contain climate co-benefits. It is worth highlighting that AFD does not finance plane fleets. | Little or no mention of climate risk or resilience in the strategy. |
| Water | Climate mitigation is not one of the priorities in the strategy. | Adaptation, climate resilience and nature-based solutions are all key aspects of the strategy. AFD’s work in the water sector takes up a large portion of AFD’s total work on adaptation. |
| Cities | All strategic objectives are either linked to mitigation or resilience. | |
Explanation
AFD strategies and frameworks
Since 2021, AFD’s climate and development strategy provides the general overarching framework that supports the bank’s climate mitigation and adaptation efforts. This includes AFD’s sectoral and country activities. However, given that each country has a unique context, the strategy does not provide granularity in terms of the types of actions which should be prioritised.
As such, the country strategies fill in this gap by interpreting the climate and development strategy in the context of specific countries and regions that the bank operates in. The focal sectors are water and sanitation, urban areas, mobility and energy. Nonetheless, AFD does not seem to have specific strategies publicly available for these sectors. Instead, it develops sectoral intervention frameworks (SIFs) and produces yearly activity reports per sector. Most SIFs have not been updated in recent years as separate strategy documents but are now incorporated on the AFD website and the AFD activity reports.
Energy transition
AFD developed three focus areas for its work in the energy sector, i.e., access to energy, energy efficiency and a modernised and decarbonised energy supply, as well as three ‘acceleration levers’, i.e., support for energy transition policies, private sector mobilisation and partnerships, and support for innovation. The Energy Transition Strategy explicitly links the focus areas for intervention to the Paris Agreement. Both mitigation and resilience to climate change are at the heart of the Energy Transition Strategy. Throughout the strategy, the link between access to reliable clean energy and resilience of energy infrastructure is continuously made. AFD aims to ensure the energy infrastructure projects it invests in are resilient.
Transport and mobility
AFD defined four goals for its activities in the mobility and transport sector. The most recent available SIF can be found here, with the corresponding activity report here.
Green and low-carbon mobility systems – aimed at avoiding or reducing local pollution through investments in green and low-carbon mobility systems.
Efficient, effective and sustainable mobility systems – AFD supports the use of efficient and sustainable technologies through project design and technical assistance.
Safe mobility systems for all – AFD invests in projects that protect the safety of complex transport systems, as well as its users with a special focus on the security of women in public transport.
AFD reports 76% of all new commitments in the transport and mobility sector contained climate co-benefits. However, it is unclear what the share of adaptation and resilience co-benefits is. The Transport and Mobility SIF does not specifically mention climate risk or resilience.
Water and sanitation
AFD’s water and sanitation SIF is explicitly based on the Sustainable Development Goals (SDGs) and Sustainable Energy 4 All (SE4All), amongst others. According to the latest activity report, the strategy focuses on three main priorities:
Access to water and sanitation through investments in decentralised water and sanitation infrastructure projects with a special focus on women and conflict areas.
Climate and ecological resilience – aimed at improving efficiency of water and sanitation services and supporting the integration of water management to increase resilience to flood risks.
Governance – focused on sectoral governance reforms and capacity building. Furthermore, the bank promotes projects that raise hygiene awareness and citizen participation.
According to the 2021 activity report, 35% of AFD’s climate adaptation commitments are from projects linked to the water and sanitation sector. AFD links water management to climate change, resilience and biodiversity throughout its projects, strategies and operations.
Cities
AFD’s strategy for sustainable cities defined three strategic objectives: to improve quality of life in urban areas, to promote sustainable urban development and to strengthen governance in cities. These objectives are supported through acceleration levers such as urban innovation laboratories, digital technologies for ‘smart cities’ and partnerships.
Resilience and mitigation both have an important place in the strategy as all strategic objectives are explicitly linked to ensuring cities and urban areas increase their resilience to climate change as well as reducing their impact on the environment.
Recommendations:
- AFD should make its methodology for developing sectoral intervention frameworks for transparency purposes publicly available.