Greenhouse gas accounting at project and portfolio level 

Project level GHG accounting

Since the publication of its Safeguards Policy Statement in 2009, the ADB has required the quantification and monitoring of GHG emissions at the project level. Specifically, the Bank states that all projects “that are expected to or currently produce significant quantities of GHGs” are expected to quantify scope 1 and 2 emissions. This includes both ex ante estimation prior to approval, and ex post annual monitoring of emissions. In terms of inclusion thresholds, the 2009 document requires this process to be undertaken for projects that are expected to or currently produce 100 ktCO₂e/year for aggregate direct and indirect emissions. The Environmental and Social Framework, approved in late 2024 and which will apply from 1 January 2026, will lower this inclusion threshold to 20 ktCO₂e/year of absolute and/or relative emissions. Once in place, this will be among the lower thresholds used among peer institutions, reflecting a best practice approach. In terms of disclosure, since 2023 the ADB requires borrowers to disclose annual (absolute and relative) emissions estimates in “relevant project documents” (such as the “Report and Recommendation of the President”, and “Climate Change Assessment”).[1]

The ADB has an accounting methodology in place to calculate, ex-ante, the GHG emissions reductions attributable to ADB projects. Given specific accounting practicalities might differ across sectors, the ADB has published additional guidelines for the energy and transport sectors.[2] The guidelines are intended to be supplementary to the general accounting methodology, which provides broad guidance to be “supplemented with [the] more detailed, project-specific guidelines”. It is unclear whether the Bank uses the same methodology for the ex-post annual monitoring of emissions that is required under its Safeguards Policy Statement.

Portfolio level GHG accounting

The ADB was previously the first MDB to commit to a target date for peaking portfolio emissions, setting a “2030 at the latest” deadline. While recognising the target as ambitious, the ADB acknowledged that achieving an earlier peak would be the “optimal course of action”. However, this target has since been dropped as part of the Climate Change Action Plan (CCAP) 2023-2030. That being said, according to the Climate Change Action Plan (CCAP) 2023–2030, the ADB is developing guidelines for reporting portfolio emissions (in line with the Technical Working Group of the International Financial Institutions). While the CCAP sets a target date of end-2024 for the release of this guidance note, this process is still ongoing.

The ADB’s 2025-2030 Corporate Results Framework (CRF) includes an indicator for “net annual greenhouse gas emissions”, suggesting the Bank will track both absolute emissions and emissions reduced at the portfolio level moving forward, although only disclosing a single net emissions indicator.

Previously, the ADB tracked total annual greenhouse gas emissions reduction (tCO₂e/year) as part of its 2019–2024 Corporate Results Framework. This tracking constituted a results framework indicator for the ADB’s Operational Priority 3 (of Strategy 2030): Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability. However, this indicator appears to have been dropped as part of the 2025–2030 CRF.

The ADB measures progress on the results framework indicators using an achievement rate, reflecting the degree of achievement relative to planned outputs and outcomes. In 2024, the ADB reported total emissions reduced of 50.2 million tCO₂e/year, resulting in an achievement rate of over 100%. The 2024 figure reflects a significant increase from the 2023 figure (27.23 million tCO₂e/year reduced), and is in line with an overall upward trend in emissions reduction over the past 5 years.[3] The Bank has established 80% as a satisfactory achievement rate. However, the methodology behind this threshold and any indication regarding future review remain unclear.

Recommendations: 

• The ADB should reaffirm its commitment to peak emissions by 2030 at the latest within the Bank’s core strategic documentation. To monitor progress towards achieving this commitment, the Bank should ensure its upcoming guidelines for reporting portfolio emissions establish a comprehensive system for monitoring and reporting of absolute emissions and emissions reductions at the portfolio level. In doing so, it should draw on leading practice exhibited by other PDBs, such as by the European Investment Bank (EIB), as well as comparable accounting norms and standards in the financial sector, including from the Transition Plan Taskforce (TPT) and Science Based Targets initiative (SBTi). Regular disclosure of portfolio-wide absolute emissions and emissions reductions (as a complement to the planned disclosure of net emissions) would allow the Bank (and stakeholders) to track its progress toward a peaking commitment and provide transparent insight on the emissions trajectory of the Bank’s portfolio over time.
• The ADB should consider expanding GHG accounting to include indirect emissions, even if not directly controlled by the project (scope 3), in its accounting practice for all projects. This would bring the Bank in line with leading practice among PDBs, such as the Dutch Entrepreneurial Development Bank (FMO), as well as with comparable accounting norms and standards in the financial sector, such as from the TPT and SBTi. The inclusion of indirect emissions can substantially change the assessment of environmental and climate impact and is therefore relevant to investment decisions.

[1] Information received directly from the ADB.

[2] In terms of sectoral coverage, the ADB explicitly states that “it is not possible to include here all methodologies for all conceivable ADB projects”.

[3] The ADB reported 17.8 million tCO₂e reduced in 2021, 19.3 million tCO₂e in 2020, 12.8 million tCO₂e in 2019, and 2.4 million tCO₂e in 2018.