Integration of climate mitigation and resilience in key sectoral strategies

The AfDB’s Climate Change and Green Growth Strategic Framework notably includes an action to “mandate the mainstreaming of climate change and green growth (including biodiversity, and land degradation neutrality) into all other Bank’s corporate, institutional, and sectoral strategies”. This required the development of a mainstreaming assessment methodology to measure internal alignment annually by 2023, and requires Bank-wide policies to be at least 75% aligned and consistent with this by 2025.

On top of this commitment, and separate to the dedicated full sector policy documents, the AfDB has developed specific Climate Finance Tracking guidance documents for transport, water, energy, and agriculture. There is no equivalent sectoral guidance document for urban development. These documents include information on how the Bank and its borrowers should track climate finance. This includes coverage of reporting requirements, definitions of climate change mitigation and adaptation for each sector, and guiding principles for combatting potential difficulties that might arise in tracking climate finance in a given sector. As climate finance is tracked and attributed at the approval stage of projects, this metric does not necessarily reflect whether climate change mitigation and/or adaptation benefits were delivered by the end of a project cycle. For this purpose, ex post monitoring is necessary.[1]

Although these sectoral climate finance tracking tools reflect a best practice approach, they alone do not necessarily mean that climate considerations are integrated across all projects in the sectors covered. These tracking documents are designed to monitor only earmarked funding for climate projects. As such, they do not cover projects which might not necessarily be categorised as climate finance, but where climate considerations must still be mainstreamed. Nor are projects (climate or otherwise) in other sectors without dedicated climate finance tracking documents (such as urban development) covered.

Energy

The AfDB’s dedicated Energy Sector Policy was drafted prior to the Paris Agreement, and has not yet been updated to reflect more ambitious and urgent climate goals.[2] Despite this, it does refer to the need for low-carbon growth and green transition. The AfDB commits to helping clients assess energy options in the context of:

1. The energy profile of the country/region.
2. National/regional adaptation and mitigation strategies.
3. A cost–benefit analysis.
4. Social and environmental impact, .

In terms of adaptation and resilience, the Energy Sector Policy also refers to drawing “as needed” on the Climate Risk Management and Adaptation Strategy (CRMA) for the implementation of AfDB energy policy.[3] In practice, this is said to involve the CRMA informing the medium-term energy strategies of the Bank, although further details are not provided.

The AfDB’s more recent New Deal on Energy for Africa 2016–2025 does refer to the Paris Agreement, particularly with respect to Nationally Determined Contributions (NDCs). While not a sector policy document to govern operations per se, the New Deal sets out the Bank’s strategy in the sector for the time period covered.

In terms of climate mitigation, the New Deal strategy promotes modern, clean and sustainable energy. An example of this support is the delivery of the Africa Renewable Energy Initiative (AREI), which aims to mobilise an additional 300 GW in capacity by 2030. In setting expected outcomes from the New Deal, the Bank calculates an estimated increase of 55% in emissions by 2025, as opposed to the business-as-usual scenario of a 78% increase. The strategy suggests that, provided there is support in the form of sufficient climate finance, Africa will be able to harness the potential of renewables, while also making use of its fossil fuel endowments, albeit “at reduced carbon budgets”.

Adaptation is also integrated into the Bank’s New Deal on Energy, recognised as a “key component of African iNDCs’ proposed adaptation efforts” with over 40% of countries having planned energy sector adaptation measures at the time the strategy was published. The AfDB will also “screen for climate risk and build resilience into every investment in the New Deal”, using the Bank’s Climate Safeguards System.[4]

While the New Deal functions as a useful action plan in the absence of an up-to-date core sectoral policy document, the AfDB urgently needs to issue an update to its energy sector policy. This should not only reflect the pledge made by the AfDB President to phase out coal, but also include explicit steps to align the Bank’s energy financing with the goals of the Paris Agreement. As part of this, the AfDB should include provisions to screen for risk of lock-in and stranded assets, in the context of a comprehensive, forward-looking consideration of the transition trajectories and decarbonisation pathways of its countries of operation.

Transport

The AfDB’s Transport Sector Policy dates from 2000 and as such only refers to “environmental considerations”, while climate change (either mitigation nor adaptation, directly or indirectly) does not feature. Environmental considerations are said to be considered across transport projects and programmes and are defined as “protection of the natural environment and adherence to environmental laws and guidelines”.

The AfDB states it “supports the introduction by member states of environmental action plans across all subsectors to ensure that future generations do not suffer environmental losses from the implementation of both public and private transport development projects”. Although this could arguably be interpreted to include accounting for climate change mitigation and adaptation, it is far from a clearly defined commitment. More concretely, the policy supports the “introduction of environmental reviews as a prerequisite to proposed transport projects” to be considered throughout the entire project cycle. The prospective content, process, and implications of such reviews is not set out.  

The AfDB is due to update its transport strategy to reflect the Bank’s agenda, according to discussions with the Bank. Pending this, transport sector guidance at the AfDB is very limited in terms of climate change integration. This is particularly concerning in light of the considerable prospective induced emissions, as well as growing adaptation needs, as African countries undertake much-needed expansion of transport infrastructure in the near future.

Water

The AfDB’s Policy on Water, finalised in 2021, replaced the previous, long-running Integrated Water Resources Management Policy, which had been in place since 2000. Fundamentally, the policy seeks to ensure water security, and to facilitate the green and inclusive use of water assets for the purposes of sustainable development. Climate change is recognised as a key driver of water security and integrated throughout, noting also the cross-cutting dependencies of other sectors on the water sector in this context.

Climate adaptation and resilience considerations feature consistently throughout the AfDB’s Policy on Water, particularly in the context of climate risk assessment and investment in resilient infrastructure. It is important to recognise that the Bank explicitly caveats that work on climate-resilient infrastructure and sustainable water management will “depend on the degree to which each of these contribute to achieving water security”, as the overriding first-order priority. In practice, given the critical relevance of climate change to water security in Africa, a core focus on water security necessarily means considering climate adaptation and resilience.

Beyond climate-resilient investments, the AfDB commits to assisting member countries in developing their climate adaptation and resilience strategies to include the measures necessary across water-related sectors. Moreover, it commits to supporting regional member countries, institutions, and economic communities through enhancing knowledge around water resource management and relevant climate change impacts, where possible. Adaptation and resilience are also explicitly mentioned as key considerations in the context of support for hydropower projects.

In terms of climate mitigation, the Policy on Water recognises the need for in water-intensive industries such as agriculture. Accordingly, it states that water resource management needs to be addressed through both a demand and supply side approach. Specifically on sanitation, the AfDB commits to “promote innovative integrated solid waste and wastewater management solutions to reduce or eliminate greenhouse gas (GHG) emissions and promote water conservation”. 

The AfDB also has a separate Water Strategy 2021–2025 which provides greater detail on the operationalisation and practical implications of the overarching Policy on Water. This strategy goes beyond general acknowledgement of the need to optimise water consumption by setting out relevant activities, particularly in the agricultural and energy sectors. Climate change is again recognised as a key challenge, with sustainable water management critical for both development and climate change adaptation and mitigation. Hydropower is also recognised as an important part of the low-carbon energy transition for the region and supporting activities are laid out accordingly (noting the overriding concern for water security). The AfDB states that hydropower production should be climate resilient while reflecting local and national needs, as part of minimising negative social and environmental impacts, particularly with regard to communities and ecosystems along river margins.[5]

The Paris Agreement is not meaningfully integrated or mentioned throughout the main text of either document. However, NDCs are referenced in the Water Strategy 2021–2025 as setting out priorities (for which the AfDB will provide technical assistance to support access to financing) for climate adaptation and mitigation. As part of this, the AfDB also recognises the need to support countries in developing National Adaptation Plans (NAPs) alongside their NDCs.

Cities

The AfDB’s 2011 Urban Development Strategy is somewhat inconsistent in its incorporation of climate change. The strategy document states that “cities are also among the top producers of greenhouse gases, which are believed to accelerate the global warming” [emphasis added]. As confirmed by the UNEP (among other sources), , so more explicit wording could be used. While referenced in the strategy, performance indicators on the integration of mitigation and adaptation measures are absent from the annexed results management framework. Their omission is particularly notable for being inconsistent with more recent evidence of the Bank’s approach in this sector. For example, a key initiative for the Bank, the Urban and Municipal Development Fund (launched in 2019), has “climate resilience and low carbon urban development” as one of its five priority areas. Moreover, the joint 2019 report “Creating Liveable Cities” – published by the AfDB, the IDB, the ADB, and the EBRD – fully integrated climate mitigation and adaptation within its approach and policy recommendations.    

Adaptation and resilience to climate change are identified as cross-cutting themes for the strategy, and there is recognition that sustainable urban development requires mainstreaming these considerations across interventions. The strategy sets out a selection of attendant action areas, including “climate proofing” of investments, early-warning system design, and “greening” of urban spaces.

Climate mitigation features implicitly in the strategy but is indirectly touched upon under the action areas for “environmental challenges and adaptation to climate change”. Relevant action areas include the development of action plans for reducing pollution, promoting better access to and a greater share of clean and renewable energy, and support for projects aiming to reduce the intensity of energy consumption and GHG emissions. Given this existing coverage (and the considerable emissions arising from urban infrastructure and buildings), explicit dedicated reference to climate mitigation should be a straightforward inclusion for future iterations of the strategy.

Agriculture

The AfDB’s Agriculture and Rural Development Sector Policy dates from 2000 and as such contains only very brief references to environmental considerations, and none at all to climate. However, agriculture features as a priority area across sectors for both climate change adaptation and mitigation in the AfDB’s Climate Change and Green Growth Strategic Framework. Moreover, the AfDB’s more recent Strategy for Agricultural Transformation in Africa 2016–2025 integrates climate change much more comprehensively. 

This Strategy states it will “aim to align with decisions of the 2015 Paris UN Climate Change Conference”, including support for countries in achieving agriculture-related targets in their NDCs. Recognising the agricultural sector’s particular vulnerability to climate change, and Africa’s relatively high dependency on agriculture, climate-smart agriculture is identified as a priority throughout. This means promoting agricultural practices “centered on efficient input use, climate change resilience, and greenhouse gas emission reduction” – showing how both the adaptation and resilience, and mitigation aspects of climate change are incorporated.

While not mentioned explicitly, the need for climate change mitigation does feature in the strategy. There is recognition of the sizeable contribution of the agricultural sector to GHG emissions, particularly from deforestation, soil management, and livestock emissions. Past initiatives supported by the AfDB to reduce emissions from deforestation and forest degradation are referenced (such as the Congo Basin Forest Fund). However, in terms of practical, actionable steps, there is only reference to “monitoring GHG emissions”, and no suggestion of how the AfDB will seek to mitigate the agricultural sector’s large GHG contribution identified earlier in the strategy. This is concerning, give the difficulty (and importance) of ensuring the expansion of the agricultural frontier is sustainably managed in settings where national policy frameworks for this purpose might not yet be sufficiently robust.

Adaptation and resilience are more comprehensively integrated in the strategy. Scaled-up climate adaptation practices are recognised as a key part of achieving self-sufficiency in priority agricultural value chains. Both adaptation and resilience are captured under the goal of “Increased inclusivity, sustainability, and nutrition” and specifically the proposed activity of “Climate Resilience Funding”. This covers funding to support climate adaptation and climate-smart agriculture practices, and eligible activities investments include “large-scale sustainable and climate-smart agriculture, agroforestry, ecotourism, and agri-tourism projects”. Moreover, there is a commitment to promote investment in country level systems and data to support resilience through climate risk tools and services.

Recommendations: 

• Across several key sectors, the AfDB’s core strategic documents are now largely outdated. The sector strategies for the agricultural and transport sector date from 2000, while the energy and urban development sector strategies date also predate the Paris Agreement. Related key strategy documents in each of these sectors partially compensate the deficiencies of the core sectoral policy documents, and include much valuable strategic content that should be retained. However, given the very different contexts faced across the Bank’s countries of operation and globally since these documents were published, it is critical that they are updated as soon as possible.
• The AfDB should consider extending coverage of specific sectoral climate tracking guidance across all sectors of lending, as well as applying this to all sectoral lending, irrespective of whether it is earmarked as climate finance.
• For the updated transport sector strategy, the AfDB should consider using the Avoid–Shift–Improve framework. This would enable the Bank to effectively address climate change mitigation, including induced emissions, to be combined with adaptation and resilience considerations.
• For the updated agricultural sector strategy, the AfDB should consider adopting a principle of “do good beyond do no harm” as a basis for stronger integration of climate change mitigation across its work in this sector (such as through afforestation, reforestation, and emissions reduction, among other initiatives).
• For the updated urban development sector strategy, the AfDB should more explicitly recognise and address climate change mitigation and adaptation considerations, particularly in light of the significant carbon footprint of this sector. This could involve including , as well as practical measures such as the adoption of minimum energy efficiency standards for building projects.[6] Ultimately, the AfDB’s core sectoral policy must give climate mitigation and adaptation needs a similar level of priority as is reflected in its more recent activities in this sector.
• For the updated energy sector strategy, the AfDB should consider setting out more clearly the processes by which it will ensure that finance does not lead to lock-in and stranding of emissive assets (in the context of the transition trajectories and decarbonisation pathways of its countries of operation) and will support a just transition. This should include requiring forward-looking assessments of lock-in risk across energy projects. A potential way to anchor this process would be to derive a maximum 2 °C (and ideally 1.5 °C) pathway for AfDB’s energy portfolio, specific to the context of its operations, against which prospective projects are assessed on their compatibility.[7]

[1] In this vein, the AfDB is currently contributing to the ongoing development of the Joint MDB “Common approach to Measuring Climate Results”.

[2] The AfDB is currently in the process of revising its Energy Sector Policy. Once an updated version is publicly available, E3G will update the analysis in this section accordingly.

[3] For further details, see the “Climate risk, resilience, and adaptation” metric.

[4] For further details, see the “Climate risk, resilience, and adaptation” metric.

[5] It is worth noting that the AfDB’s Integrated Safeguards System includes a specific annex dedicated to dams (including for hydropower purposes). While this does address the impact on local communities, environmental concerns are not explicitly addressed.  

[6] For further details, see the “Energy efficiency strategy, standards, and investment” metric.

[7] For further recommendations regarding the AfDB’s approach to the energy sector, see in particular the “Fossil fuel exclusion policies” metric.