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 | The IDB’s sovereign lending portfolio ranked 3rd in the 2023 DFI Transparency Index, having consistently been rated as “very good” since 2016. This reflects the Bank’s strong disclosure practices in key areas, such as its provision of the project level data underlying its submission to the Joint Report on MDB Climate Finance in a downloadable spreadsheet format (representing best practice among the MDBs). However, there remains room for improvement, particularly with its financial intermediary lending lacking sufficiently granular disclosure. For the non-sovereign portfolio of IDB Invest, the overall disclosure score was lower, yet still ranked 5th among DFIs with non-sovereign operations covered by the DFI Transparency Index. Elements of best practice reporting are evident, e.g., its sustainable bond programme and TCFD reporting, but there is notable room for improvement. As with the sovereign arm, areas for potential improvement include intermediary financing disclosures and associated subprojects. |
| Alignment and reasoning | |
| Climate Finance Data | The IDB generally has strong disclosure standards for its public sector operations. Its provision of the project level data underlying its submission to the Joint Report on MDB Climate Finance in a downloadable spreadsheet format represents best practice among the MDBs. |
| Financial Intermediary Lending | The IDB discloses the size of loans and recipient entities for financial intermediary lending. However, this falls short of the ideal level granularity in disclosure of subprojects financed. |
| TCFD Reporting | IDB Invest undertakes TCFD reporting, but this does not apply to the IDB Group as a whole. |
Transparency of climate finance data
The IDB provided the project level data underlying its submission to the MDB Joint Report on MDB Climate Finance in an Excel readable format for 2016–2021. This represents best practice among the MDBs. It also follows the MDB Joint Methodology for tracking climate finance for both mitigation and adaptation. Moreover, the IDB provides an adequate level of information in its submission to the OECD-DAC (Development Assistance Committee) climate-related development finance database.
The IDB ranked 3rd in the 2023 DFI Transparency Index, having consistently been rated as “very good” since 2016. The Bank has published International Aid Transparency Initiative (IATI) data since 2013, continuing to do so on a monthly basis. This DFI Transparency Index ranking reflects the sovereign-backed lending portfolio, and not the private sector operations of IDB Invest.
IDB Invest was previously rated “poor” in 2022, owing to less frequent and lower quality disclosure of IATI data, but has significantly improved its performance as of the 2023 Index. It performed relatively strongly across the board in 2023, apart from on the “Financial Intermediary Sub-investments” component. IDB Invest’s disclosures are governed by the Access to Information Policy adopted in 2019. The poor 2022 performance of IDB Invest in the DFI index is attributed by the Bank to being in the initial stages of implementing the policy. However, this initial assessment served as a valuable benchmark for the Bank, with its commitment to improvement resulting in a significantly improved 2023 assessment.
The IDB Group has also pioneered its standard-setting Green Bond Transparency Platform (see the “Promotion of green finance” metric for more detail), enhancing transparency in the LAC green bond market. During the Finance in Common Summit 2023, it was announced that this initiative would be extended to cover issuing partners outside the LAC region, including the AFD, the KfW, and the EIB. Beyond this, IDB Invest also launched an annual Sustainable Bond Program: Allocation and Impact Report in 2022, displaying a best-practice level of reporting among private sector DFIs.
Transparency of financial intermediary lending
The IDB is consulting on a new Access to Information Policy. IDB Invest has a separate Access to Information Policy, released in 2019. This states, “for investments made through financial intermediaries, IDB Invest discloses the environmental and social information through the Investment Summary”. This includes the main impacts of the project and any mitigation measures in place. This does not include disclosure of all subprojects financed.
The IDB’s updated Environmental and Social Policy Framework (ESPF) states that “where a sub-project includes activities with particularly high environmental and social risks, the financial intermediary (FI) will refer that sub-project to the IDB for review before their inclusion in the financed portfolio”. The IDB reviews the capacity of prospective clients and undertakes due diligence to ensure their ability to comply with this requirement prior to disbursement. The IDB also discloses an Environmental and Social Management Report (ESMR) for each financial intermediary which includes the financial intermediary risk level, and summarises the IDB’s due diligence, including an overview of the nature and scale of the anticipated subprojects. The IDB discloses the size of loans given to a financial intermediary, along with the name of the intermediary. The public branch of the IDB Group does not do general purpose financing.
However, an evaluation of the IDB’s financial intermediary lending found that “although both IDB and IIC (now IDB Invest) required [financial intermediaries] to report on the environmental and social risks of subprojects, the reporting format often lacked even basic information on the subloans. In many SME operations, [financial intermediaries] did not present the name of the company or the sector.” In view of this, IDB Invest offers advisory services to financial intermediary clients to increase their capacity and ambition in sustainable lending, policies and governance.This includes supporting partner financial institutions in their pathway to become aligned with the Paris Agreement in their overall operations (through “Counterparty-based Alignment”). To this end, IDB Invest has also been developing Climate Advisory Services for financial institutions that will be adjusted over time depending on their level of readiness and capacities to progressively, over time, become Paris Agreement aligned.
TCFD reporting
The IDB Group as a whole does not currently undertake TCFD reporting. However, IDB Invest has been doing TCFD reporting as an annex to its own annual report since 2019. Going forward, disclosure should be in line with the International Sustainability Standard Board (ISSB) standards, as the TCFD has been absorbed into these. Of particular relevance for MDBs such as the IDB is alignment with ISSB’s IFRS S2 climate-related disclosure standard.
Recommendation:
- The IDB should ensure disclosure of details regarding the subprojects financed by financial intermediaries, beyond just the total loan amounts and the responsible intermediaries. As part of this, the IDB should provide more targeted technical assistance to support the Paris alignment and reporting practices of the financial intermediaries it works with. This should include milestones and key performance indicators to safeguard the continued usage of IDB funds.
Last Update: February 2025