| Paris alignment | Reasoning |
|---|---|
| Paris aligned | The WBG has developed a comprehensive country engagement process, with enhanced integration of climate change mitigation and resilience considerations in its assessment of country development priorities facilitated by the 2021 launch of Country Climate and Development Reports (CCDRs). These include proactive efforts to integrate NDCs and LTSs into country work, while the newly established Global LTS Program supports the development of decarbonisation pathways to complement existing national plans. However, it is unclear how the WBG will address the need to go beyond or increase ambition of NDCs where necessary. |
Explanation
Country level strategies
The WBG’s country engagement process with a client country is twofold. Diagnostic reports are first developed, most prominently the Systematic Country Diagnostic (SCD), and since 2021, the Country Climate and Development Report (CCDR). While SCDs are reports on general economic development that include climate change as part of the context, the CCDRs are reports containing a set of options for high-impact climate mitigation and/or adaptation in the context of the country’s development pathway. The WBG arms are jointly engaged throughout the SCD and CCDR processes. Other diagnostics can complement these, such as IFC’s Country Private Sector Diagnostics (CPSDs), which assesses a client country’s private sector.
The diagnostic tools inform the Country Partnership Framework (CPF), which aims to review and guide the WBG’s country programs, gauge their effectiveness, and provide an action plan for WBG engagement in client countries over a 4–10 year period.
Systematic Country Diagnostics
The Systematic Country Diagnostic (SCD) report, usually prepared once every 4–6 years, undertakes a comprehensive study of a country’s development agenda and identifies a set of medium and long-term challenges the client country should address to achieve the goals promoted by the WBG.1 The SCD then identifies a set of priorities to overcome the identified constraints as well as outcomes critical to achieving these goals. The SCD process is conducted upstream from the CPF process, with the SCD providing the analytical foundation for the CPF.
Climate mitigation, adaptation, and resilience considerations are included in the SCD process, through the lens of their impact on a client country’s development pathway. The SCD presents priorities and potential areas of action to address these, also considering the country’s Nationally Determined Contribution (NDC) submission. Climate risk and vulnerability, as well as risks related to stranded assets and carbon lock-ins, are incorporated in the process of outcomes identification.
According to the WB Evolution Roadmap 2023 update report, the country engagement process will no longer include the SCD as a stand-alone prerequisite of a CPF in each country but will “draw on a synthesis of the enhanced set of core analytics”. This will include a range of sectoral diagnostics, including CCDRs, on poverty and inequality issues, prosperity and key economic sectors, public finance, and private investment. While publication of SCDs since October 2023 has been ongoing, it is unclear whether SCDs will continue to be published on a more limited basis or will be gradually phased out.
Country Climate and Development Reports
As part of the Climate Change Action Plan 2021–2025 (CCAP), the WBG launched the CCDRs to promote further integration of the climate–development nexus within the WBG’s country engagement strategies. With CCDRs, the WBG has established a high standard among MDBs for conducting country diagnostics, delivering an in-depth analysis of the climate-development nexus and providing sector-specific insights to clarify the macroeconomic impacts of climate change. They hold significant potential for mainstreaming climate considerations at the country level and facilitating increased finance flows towards climate and development priorities.
CCDRs analyse the impacts of climate change and decarbonisation on countries’ development strategies and formulate specific investment priorities. These reports are also aimed at supporting countries in the process of updating and implementing their NDCs. The WBG aims to publish a CCDR for all client countries by 2025, with 72 published as of February 2025.
The CCDRs prioritise actions by focusing on three policy areas:
- Identifying areas where climate action aligns with short- to medium-term development objectives.
- Evaluating the necessary policy and investment trade-offs required to achieve climate objectives, including inter-generational trade-offs and conducting cost–benefit analyses of delaying certain actions.
- Exploring opportunities to harness private sector resources and solutions.
CCDRs can help countries in the formulation of mitigation and adaptation strategies which aim to enhance existing commitments. For example, the Vietnamese CCDR presents five priority policy packages to guide future development projects, aligned with the country’s climate commitments. Some CCDRs, such as that for Türkiye, go as far as explicitly calling for updating NDCs to align with the Paris Agreement goals. Even for countries with updated NDCs like Bangladesh and Egypt, CCDRs advocate for increased ambition in specific areas such as decarbonisation pathways.
For CCDRs to maximise their value-add in practice, they should facilitate input from across all relevant country level stakeholders, to foster country ownership of the proposed priorities and strategies. This should include collaboration with key players in achieving countries’ climate and development priorities, for example National Development Banks (NDBs), which have in-depth local knowledge on financing needs and the mandate to implement the country’s priorities. If developed in this manner, CCDRs can contribute to overcoming the oft-cited barrier among would-be financiers regarding the lack of a pipeline of readily investable propositions at the country level.
Country Partnership Framework
The Country Partnership Framework (CPF) process aims to review and guide the WBG’s country programs and gauge their effectiveness. Building on the findings of the SCD, the CCDR and the review of the previous engagement cycle, the CPF process involves discussions between the WBG and client governments to establish objectives and outcomes towards which the WBG can engage and contribute.2 The result is a strategy document, which covers:
- country context
- Government Development Strategy
- High-level Outcomes (HLOs) and WBG Program Objectives.
The CPF addresses climate change considerations for each country, building on the findings of the SCD and the CCDR. Regarding mitigation, the CPF accounts for the impact of projects on global GHG emissions, and addresses risks from fossil fuel price volatility and climate-related regulations. On adaptation, CPFs need to cover how policies, programs and projects could affect or be affected by climate impacts. Following that, climate risk is to be integrated within the country’s development priorities and the content of the programs proposed, which can include NDC-based objectives.
According to the WBG Evolution Roadmap published in October 2023, future CPFs will, in line with new WBG policy, include a “renewed focus on enabling and mobilising both private capital flows and domestic resources”. They will also place a stronger focus on sub-national actors’ work on strengthening policy/regulatory capacity, enhance creditworthiness, and ensure critical investments are made where necessary.
Country level initiatives
The WBG’s NDC and LTS Support programme helps countries create strategies for deep decarbonisation including enhancing NDCs and developing LTSs. The Global LTS programme was launched to support the development of Paris aligned decarbonisation pathways, collaborate with key ministries in countries to define GHG emissions reduction goals, evaluate sector-specific pathways, and understand the economic benefits of climate action. In 2022, the Global LTS program supported the LTS development process in three pilot countries: the Dominican Republic, Jordan, and Uzbekistan.
Furthermore, according to the COP28 MDB Joint statement, the WBG will be hosting a new Joint MDB LTS Program for MDBs to effectively coordinate efforts to support low- and middle-income countries in formulating and operationalising ambitious long-term strategies. According to the MDB principles for Long-Term Strategy (LTS) support, such LTSs should support a long-term vision for a decarbonised, climate-resilient future on a path to achieve a 1.5 °C compatible goal. While this is a positive step, it is unclear when or how this will be operationalised and what links are established between this initiative and the Global LTS program.
In October 2024, Brazil launched the Brazil Climate and Ecological Transformation Investment Platform (BIP), a country-led initiative to advance Brazil’s development and climate goals by mobilising international capital across three focus sectors: Nature based Solutions and Bioeconomy, Industry and Mobility, and Energy. Led by Brazil’s government and supported by partners including the WBG, the platform has already identified a USD 10.8 billion pipeline of pilot projects, with BNDES and GFANZ hosting the Platform’s Secretariat.
Recommendations:
- SCDs and CCDRs should anchor their recommendations in a robust understanding of country level transition pathways compatible with the temperature goals of the Paris Agreement and development needs, taking into account and ensuring coherence with national plans and priorities. This is critical to ensure that the SCDs or CCDRs do not recommend financing or support for interventions which risk locking in emissive (and ultimately uncompetitive) stranded assets, or are otherwise misaligned with the goals of the Paris Agreement. The recommendations in CCDRs should strive to be aligned with a pathway consistent with the 1.5 °C temperature goal in the Paris Agreement. This would enable the reports to be even more relevant to client countries when updating their NDCs.
- The WBG should consider merging or integrating aspects of the CPFs and CCDRs with each other to ensure that the policy recommendations for countries are aligned with the WBG’s country programs.
- The WBG should consider publishing a guidance note for CCDRs based on those established for SCDs and CPFs. This note could promote harmonisation across CCDRs, outline minimum standards for stakeholder engagement (including with other key providers of finance in the client country), and ensure increased transparency.
- The WBG should consider developing more CCDRs with a regional focus, such its G5 Sahel Region and Pacific Atoll Countries CCDRs, which enable a stronger focus on regional integration, comparative advantages, cooperation for nature and biodiversity, and coordination on resource management.
- For CCDRs to maximise their value-add in practice, they should facilitate input from across all relevant country level stakeholders, to foster country ownership of the proposed priorities and strategies. This should include collaboration with key players in achieving countries’ climate and development priorities, for example National Development Banks (NDBs), which have in-depth local knowledge on financing needs and the mandate to implement the country’s priorities. If developed in this manner, CCDRs can contribute to overcoming the oft-cited barrier among would-be financiers regarding the lack of a pipeline of readily investable propositions at the country level.
1 Namely “reducing extreme poverty and promoting shared prosperity in a sustainable manner”.
2 Country Engagement Notes (CENs) can be used as alternatives to CPFs when the WBG and government are unable to define detailed objectives or develop a program for the medium term, though a CPF is expected at term for all countries.