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.
| Paris alignment | Reasoning |
|---|---|
| Some progress | Energy efficiency is presented as a priority area within the ADB’s Climate Change Action Plan 2023–2030 & 2021 Energy Policy. However, the ADB has not explicitly adopted an “energy efficiency first principle”. At the sectoral level, the ADB has followed best practice in adopting the “Avoid–Shift–Improve” framework to guide transport sector operations. However, its stated prioritisation of energy efficiency remains insufficiently operationalised in the building sector. The Bank has not clearly established minimum standards for efficiency in either the transport or buildings sector, meaning that intermediated operations similarly lack benchmarks to verify and guide efficiency improvements. |
| Overarching energy efficiency first strategy/principle |
| Energy efficiency is recognised as a priority area within the ADB’s Climate Change Action Plan 2017–2030 & 2021 Energy Policy. However, neither document makes clear reference to a specific energy efficiency first principle. Moreover, the reported dip in demand-side energy efficiency investments (as per the Review of The ADB Clean Energy Program) calls into question how this prioritisation is operationalised in practice. |
| Transport energy efficiency | Building energy efficiency | Financial intermediary energy efficiency |
|---|---|---|
| The ADB has adopted the “Avoid–Shift–Improve” approach as guiding framework for its transport operations. However, details as to how this is being operationalised are lacking. | The ADB recognises the importance of energy efficiency in the buildings sector in both the Strategy 2030 Operational Plan for Cities and the 2021 Energy Policy. The Bank has also published a comprehensive Handbook on Energy Efficiency in Buildings. However, the ADB does not seem to apply any minimum energy efficiency standards for investments in new or existing buildings. | The ADB states that its Energy Policy, including recognition of energy efficiency as a priority, also applies to financial intermediaries. However, the energy policy does not contain any guidance on the application of specific standards, suggesting that in practice the ADB does not mandate financial intermediaries to uphold any specific minimum energy efficiency criteria. |
Energy efficiency financing
Energy efficiency is referred to as a priority in the ADB’s Climate Change Action Plan 2023–2030. This includes setting out actions related to supporting energy efficiency improvements in the power, heating, cooling, and buildings sectors (among others), as well as by small and medium-sized enterprises (SMEs). Moreover, the Bank’s 2021 Energy Policy states that it will support Developing Member Countries’ (DMCs) demand-side energy efficiency planning. This involves providing DMCs with “technical assistance, grants, and loans to establish legal and regulatory frameworks, policies, and programs that support energy efficiency”.[1] There is also a reference to developing “incentive mechanisms for consumers, utilities, energy service companies, and other market players”. Despite this evidence of prioritisation, none of the Bank’s relevant strategic documentation makes explicit reference to any form of “energy efficiency first” principle being in place.
The extent to which this strategic level coverage has been operationalised and implemented is unclear. The most recent publicly available energy efficiency investment data from the 2020 Review of The ADB Clean Energy Program showed that in the latest reporting years of 2017 and 2018, no investments in demand-side energy efficiency were made. In contrast, investments in supply-side efficiency had remained more consistent. The review states that investments in supply-side energy efficiency were almost double (60.4% of the total energy efficiency investment) that of demand-side energy efficiency (39.6%) over 2008–2018. Consequently, the 2020 ADB independent evaluation of the energy policy and programme argues that “no amount of generosity in classification can mask the limited number of efficiency initiatives on the demand side, where there was a shortfall in the application of both financial and knowledge capital”.
No more recent energy efficiency investment figures have been made publicly available, making it difficult to verify the ADB’s continued commitment to this area. The ADB’s 2023 Annual Review states that investments in energy efficiency and other relatively new areas poses “challenges” for the performance of Bank’s sovereign portfolio. However, no further details are provided regarding how or why, and what the perceived implications of this are (including if and how the Bank intends to overcome the identified challenges). Positively, the Bank does note that “taking risks in projects to apply new or advanced technology can help inform future ADB operations and increase the value addition of ADB support to DMCs”. However, similarly, no concrete details are provided regarding how this relates to the Bank’s approach to energy efficiency going forward.
In terms of project level energy efficiency policies across ADB operations, the Bank’s updated Environmental and Social Framework includes the broad requirement that projects will deploy “technically and financially feasible measures for improving resource conservation, minimising the intensity of resource use, and ensuring efficient consumption of energy […]”. For projects that are “potentially significant user[s] of energy” (with this threshold not quantitatively defined), sector-specific measures to optimise energy use are also required, again subject to financial and technical feasibility. These measures are primarily derived from the World Bank Group’s Environmental, Health, and Safety (EHS) Guidelines. These provide a menu of granular measures for improving energy efficiency in process heating, process cooling, and compressed air systems – but do not constitute a set of best practice sectoral standards to guide project design across key energy efficiency sectors (such as buildings and transport).
Buildings
The Strategy 2030 Operational Plan for Cities refers to the ADB promoting increased energy efficiency in buildings, as well as “increasing access to heating and cooling systems using renewable energy”. Similarly, the 2021 Energy Policy outlines support for district heating systems due to efficiency benefits compared to decentralised heating systems, as well as energy efficient cooling (including efficient air conditioning). In 2024, the ADB also notably published a comprehensive Handbook on Energy Efficiency in Buildings, providing practical guidance and tools for the design, financing, and evaluation of energy efficiency projects in the building sector.
However, the recommendations and conclusions of this handbook are not explicitly translated into concrete guidance or requirements for ADB projects. Moreover, despite this evidence of the Bank recognising the importance of energy efficiency in the buildings sector, the ADB does not seem to have any minimum energy efficiency standards in place for operations involving either new buildings or renovation of existing buildings. This falls short of best practice among PDBs, which involves the use of internationally recognised certification standards such as the LEED (Leadership in Energy and Environmental Design) rating system or IFC’s Edge Tool to verify green and eligible investments. That being said, the ADB does utilise the MDB Common Principles for Climate Mitigation Finance Tracking, which contain reference to internationally recognised green building criteria. With the Bank aiming to maximise climate mitigation finance, the ADB therefore aims to implement these criteria across relevant projects.[2]
Transport
The Strategy 2030 Transport Sector Directional Guide (TSDG), published in 2022, explicitly recognises the need to provide mobility through low- or zero-emissions transport systems. In doing so, it explicitly states that “full-scale decarbonization of the transport sector should be the aim and ADB will provide policy and financial support to countries to meet such an objective.” Accordingly, the ADB has adopted the Avoid–Shift–Improve framework to guide its transport sector operations, as part of its efforts to address sectoral emissions. This is defined by the Bank as follows:
- Avoiding the need for travel through better land-use planning and increased use of digital access.
- Shifting to less emitting modes of travel such as those with higher energy efficiency rates like railways and water transport, as well as active modes of transport such as walking and cycling.
- Improving technical propulsion methods and the uptake of lower or zero-emitting powertrains for all transport modes.
Financial intermediaries
The ADB’s 2021 Energy Policy, which promotes investments in energy efficiency, also applies to financial intermediary loans. However, given the absence of minimum standards in the energy policy, it is unclear what this entails in practice, beyond implying broad support for financial intermediaries who wish to support energy efficiency operations.
Recommendations:
- To strengthen the ADB’s existing commitment to energy efficiency, the Bank should go beyond the recognition of energy efficiency as a priority towards the adoption of an explicit “energy efficiency first principle”. Such an approach would prioritise cost-effective demand-side solutions over supply-side alternatives where appropriate. This would align with global best practices, and complement the Bank’s existing support for Developing Member Countries’ (DMCs) demand-side energy efficiency planning.
- The ADB should adopt minimum energy efficiency standards as part of its Cities Operational Plan, to apply to any operations (including those financed through financial intermediaries) involving new buildings or the renovation of existing buildings. These standards should ideally be anchored in internationally recognised best practices, such as the EDGE or LEED standards (as have been implemented by other development finance institutions, such as the European Investment Bank (EIB) and Dutch Entrepreneurial Development Bank (FMO)). Doing so would ensure that potentially variable national standards do not contribute to the locking-in of infrastructure that is misaligned with country level decarbonisation trajectories, such as those outlined in Long Term Strategies (where available).
[1] Numerous examples of these kind of projects being implemented can be found through the ADB’s project portal.
[2] Information received directly from the ADB.
Last Update: April 2025