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 | Across sectors, the AfDB’s updated Integrated Safeguard System (ISS) requires borrowers to conduct ex ante GHG estimation (gross and net), to be reported as part of project appraisal reports (PAR). However, the Bank does not quantitatively define the thresholds for inclusion under this requirement nor the scopes covered, potentially hindering consistent application across operations. While there is no portfolio-wide gross emissions or emissions reduction target, there is a tracking system in place for energy sector emissions reductions with an accompanying target. |
| Year started | Inclusion threshold (CO2e/ year) | Sectors covered | Target |
| 2015 | The AfDB’s updated ISS does not provide quantitative definitions for the thresholds over which GHG emissions estimation is required. It is also unclear what scopes are covered by this estimation. | As per the ISS, the requirement of borrowers to conduct a GHG estimation applies across sectors. In practice, discussions with the AfDB have suggested that projects in the energy, land use and agriculture, water and sanitation, and transport sectors have been covered so far. | The AfDB does not have any portfolio-wide GHG emissions targets. However, the Bank does have an annual and multi-year cumulative target for emissions reduction in the energy sector. |
Portfolio-level GHG accounting
The AfDB has developed results indicators and targets across the “High 5” priority areas of development that are part of the AfDB’s Results Measurement Framework 2016–2025.[1] Accordingly, the AfDB’s Annual Development Effectiveness Review tracks progress against key indicators for each priority area. Emissions reduction in energy is one of the indicators for “light up and power Africa”, with an annual target of 1,800 (ktCO2e) and a cumulative target of 18,000 (ktCO2e) by 2025. In the 2023 edition, emissions reductions of 2,626 (ktCO2e) were recorded for 2022.
However, the AfDB does not currently appear to aggregate or disclose gross portfolio-wide emissions, falling short of this widespread accounting and reporting norm among peer institutions.[2] Despite this, the AfDB recognises the advantages of a harmonised approach with other International Financial Institutions (IFIs) on GHG accounting to foster good practice and transparency. Its participation in the technical Working Group of the International Financial Institutions is representative of this.
Project level GHG accounting
At the project level, in 2015 the AfDB launched an in-house GHG tracking tool as part of its Integrated Safeguard System (ISS). The Bank’s ISS has since been updated as of 2023. It requires borrowers to estimate ex ante gross GHG emissions resulting from a project as part of the Environmental and Social Assessment (ESA). It is not made clear which scopes this estimate is required to cover. In cases for which this is not deemed technically or financially feasible due to the capacity of the borrower, the AfDB commits to ensuring this takes place, either through providing technical assistance or carrying out the estimation on their behalf. Borrowers are also permitted to use national methodologies (accepted in the context of international agreements on climate change) provided the AfDB agrees to this.
The ISS further states that projects with “diverse and small sources of emissions” or “where emissions are not likely to be significant”, GHG estimations will not be required. However, no quantitative criteria are provided to define these thresholds. As a result, it is unclear how the Bank’s inclusion threshold for accounting compares to best practice among peer institutions.[3] Without establishing a clear quantitative threshold (and relying instead on subjective assessments such as “small” and “significant”) it is also difficult to credibly ensure consistency in accounting requirements across operations.
In terms of reporting, these ex-ante GHG emissions estimates (gross and net) are included on a project-by-project basis in project appraisal reports (PARs). There is no indication that ex post accounting or reporting takes place. As part of the initial ISS that launched its GHG reporting efforts, the Bank revealed that it would follow an approach of “graduated reporting”. This implied that the AfDB would initially report on emissions for all “Category 1” operations (i.e., projects which are likely to induce significant and/or irreversible adverse environmental and/or social impacts, or to significantly affect environmental or social components that the Bank or the borrowing country considers sensitive). Based on the findings of using the GHG tool in these cases, reporting would then be gradually refined and expanded. Since the inception of its accounting tool, discussions with the Bank have suggested that GHG accounting has so far covered projects in the energy, land use, agriculture, water and sanitation, and transport sectors. Notably, the updated 2023 ISS makes no reference to the “graduated reporting” principle. As a result, the status of this process is not explicitly clear.
Recommendations:
- The AfDB should publicly disclose its methodology for GHG accounting and reporting at project level, covering all relevant sectors, and confirming the status of its “graduated reporting” approach. This should include evidence on how the AfDB uses the tool in practice, including how it determines whether emissions are “likely to be significant” and how this is defined.
- In line with best practice in other MDBs, it is recommended that the AfDB transition towards setting a clear inclusion threshold (such as those used by the ADB and the IDB, among other peer institutions) to determine which projects are guaranteed to undergo GHG accounting.
- The AfDB should consider implementing ex post requirements for accounting and reporting at the project level, to complement the existing ex ante This would allow the Bank to verify and evaluate the ex ante estimations of project emissions, and monitor for unexpected deviations.[4]
- Following a phased approach, the AfDB should extend its strong emissions reporting and target setting procedures for energy sector operations across its portfolio. This could be done through first replicating this sectoral emissions tracking across other high-emitting sectors, and ultimately aggregating sectoral accounting to report on gross portfolio-wide emissions and emissions reductions. In doing so, it should draw on leading practice exhibited by other Public Development Banks (PDBs), such as the European Investment Bank (EIB) (with consideration for the contextual differences), as well as in comparable accounting norms and standards in the financial sector, including from the Transition Plan Taskforce (TPT) and Science Based Targets initiative (SBTi).
[1] These “High 5s” are: (1) light up and power Africa; (2) feed Africa; (3) industrialise Africa; (4) integrate Africa; and (5) improve the quality of life for the people of Africa. For further coverage, see the “Climate strategy and overarching strategy” metric.
[2] See for example the IDB’s Sustainability Report, ADB’s Corporate Results Framework, and WBG’s Corporate Scorecard.
[3] For example, the ADB has set an threshold of 20 ktCO2e/year, while the IDB has established a slightly higher 25 ktCO2e/year threshold.
[4] Leading practice assessed by E3G’s Matrix in this regard is demonstrated by the Dutch Entrepreneurial Development Bank (FMO).
Last Update: February 2025