Islamic Development Bank

Climate risk, resilience and adaptation

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs

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Paris AlignmentReasoning
Some progressEvidence of good project-level climate risk screening. Further work needed at portfolio level and enhancing client climate resilience. More progress also needed on adaptation finance
Project-level climate risk management proceduresScope of coverage of project-level climate risk managementEnhancing client climate resilience Adaptation  
finance 
IsDB has a specific process for climate risk management, including risk screeningIsDB screens all projects for climate risks; a subset of these are examined for climate-proofing optionsNo evidence foundRecently started reporting on adaptation finance

Explanation

The climate risk management process at IsDB comprises four phases (Climate Risk Screening, Project Impact Assessment, Adaptation Assessment and Implementation).  

The climate risk screening generates an overall climate risk ranking and identifies key climate risk areas for the project, based on the project category and location. The risk screening is carried out using the AWARE climate screening tool – an online tool that allows users to screen investments for climate risk.  

If the screening indicates that a project is exposed to some level of climate risk, a Project Impact Assessment follows using the IsDB climate change adaptation sector guidance note. The Project Impact Assessment identifies climate vulnerabilities, hazards and actions that would best reduce those impacts, thereby establishing a direct link between specific project activities and the overall objective of reducing climate vulnerability. The risk level also determines the depth of involvement of the climate change team on the overall project. For instance, when the climate risk level of the project is low, the climate change team may not necessarily need to participate in project preparation or the appraisal mission. However, for high risk projects, the climate change team would need to participate in the preparation or appraisal mission.  

The Adaptation Assessment involves identifying possible adaptation solutions after the identification of potential project vulnerabilities. The guidance note describes how to use of qualitative (multi-criteria analysis) and quantitative (cost-benefit analysis and cost-effectiveness analysis) for evaluating and prioritizing among adaptation options. Upon selection of the adaptation measures, implementation arrangements are established to determine roles and responsibilities, to identify needs for technical support and capacity building, and to provide for ongoing monitoring and evaluation. 

Recommendation: IsDB should move beyond the project-level climate risk analysis should put in place a dedicated resilience strategy. 

Last Update: November 2020

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