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.
|Some progress||Transparency of climate finance data is very good but financial intermediary lending needs improving.|
|Climate Finance Data||Publishes underlying project level data for the Joint Report on Multilateral Development Banks’ Climate Finance.|
|Financial intermediary lending||Disclosure of environmental risks but not of sub-projects financed.|
Transparency of climate finance data
The Inter-American Development Bank has provided the project level data underlying its submission to the MDB joint report in an excel readable format for 2016-2018. This represents best practice amongst the Multilateral Development Banks. The IDB provides an adequate level of information in its submission to the OECD-DAC (Development Assistance Committee) climate-related development finance database.
Transparency of financial intermediary lending
A board approved, updated environmental and social policy framework is available, this will become effective in September 2021. E3G understands that as part of the implementation activities, the IDB is currently preparing procedures and guidance on both financial intermediaries and information disclosure. The framework 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 does disclose an Environmental and Social Management Report (ESMR) for a financial intermediary which includes the financial intermediary risk level, and summarizes the IDB’s due diligence, including an overview of the nature and scale of the anticipated sub-projects.
The Inter-American Development Bank is currently going through a consultation period on a new Access to Information Policy. However, an evaluation of its 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 sub-loans. In many SME operations, [financial intermediaries] did not present the name of the company or the sector.” This needs to be improved.
IDB Invest has a separate Access to Information Policy released in 2019. It 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 sub-projects financed.
The IDB discloses the size of loans given to a financial intermediary, along with the name of the intermediary.
Recommendation: We recommend that all MDBs consider disclosing their operations against a version of the EU Sustainable Finance Taxonomy that has been adapted for the region the bank operates in. This is because it is science based and is reviewed regularly to reflect changes in technology and science.
Regarding the Taskforce for Climate-Related Financial Disclosure (TCFD), E3G understands the IDB has been undertaking an evaluation process to understand how TCFD recommendations apply to its business model, how its processes and current disclosures already align with the TCFD framework and the value added of its implementation.