Nature based solutions

Nature based solutions

The AfDB has “three main approaches to nature-based solutions; namely, restoring damaged ecosystems (land, forests and water bodies), conserving biodiversity, and integrated natural resources management.” Nature based solutions (NBS) also feature throughout the AfDB’s Climate Change and Green Growth Strategic Framework as targets for investment. Under climate change adaptation, they feature as tools to be promoted in the “agriculture, forestry, fisheries, and land use” and the “disaster risk management plus human and infrastructure safety” sections. Under climate change mitigation, they are referenced in the “urban infrastructure development” section.

Recognising biodiversity as a cross-cutting priority area for green growth, NBS are acknowledged as providing both green growth and biodiversity benefits, therefore requiring the development of an integrated approach for their use in the Bank’s portfolio. Accordingly, the Climate Change and Green Growth Strategic Framework commits the AfDB to building partnerships and co-delivering specific outputs (two by 2023, five by 2025) with leading actors in the biodiversity and NBS space (including on emerging areas). On the basis of activities such as hosting and co-hosting knowledge-building events on biodiversity at COP15, as well as involvement in the African Ministerial Conference on the Environment (AMCEN) and United Nations Convention to Combat Desertification (UNCCD), the AfDB is well on track to fulfilling this broad commitment.

Biodiversity

The AfDB’s Climate Change and Green Growth Strategic Framework includes biodiversity as a cross-cutting priority area. Throughout the strategy, green growth is explicitly defined as economic growth which “maintains and enhances biodiversity and ecosystems”.

Accordingly, the AfDB commits to focusing capital investments on the following areas:

• Targeted biodiversity restoration and protection projects.
• Biodiversity components in Agriculture, Forestry and Other Land Use (AFOLU) and maritime projects.
• Climate change adaptation projects with strong biodiversity co-benefits.[1]
• Biodiversity components in large infrastructure projects.

Prospective investments touted include afforestation, increasing carbon sinks to enhance biodiversity, coastal protection, and specific biodiversity components in infrastructure projects, such as financing urban green spaces.

To facilitate this, the AfDB has committed to creating a biodiversity tracking system,[2] screening for potential biodiversity co-benefits to better mainstream these activities across the Bank’s portfolio while also supporting African countries to develop biodiversity strategies (though only explicitly through financial support).

Accordingly, the Climate Change Strategic Framework commits the AfDB to developing a full list of eligible areas for support (given the necessity of biodiversity neutrality as a minimum) and including guidance on biodiversity risks for project appraisal as part of standard Environment & Social (E&S) and climate risk assessments (for all projects by 2025). Additionally, the AfDB commits to developing a full indicator framework for capturing the co-benefits for biodiversity conservation and restoration (as well as degradation neutrality) by 2023, to be applied (and reported on) by all projects by 2025. While this indicator framework has not yet been developed, the African Natural Resources Management and Investment Centre (the non-lending department of the Bank with the mandate for biodiversity actions and targets) is in the process of developing a “Natural Resources Action Plan” to fulfil this commitment.[3] 

To advance the implementation of the Global Biodiversity Framework (GBF), the AfDB announced in 2023 that it will partner with UNEP to establish an Expert Group on Biodiversity Finance; to provide African countries technical assistance and knowledge on the implementation of the GBF and mobilise finance in the sector.

Agriculture

Under the CCGG Framework, the AfDB identifies agriculture, forestry, fisheries and land use as a priority area for both mitigation and adaptation. It states that capital investments by the AfDB will be focused on supporting the adaptive capacity of farmers, climate smart agriculture and land use, and expanding climate resilient and green agricultural infrastructures.

As part of this, the need for investment to reduce deforestation and forest degradation is recognised, including that resulting from biomass use and land-use change. However, despite mention of contributing to sustainable land use, specific commitments or targets for reducing agricultural commodity-driven deforestation are lacking from the CCGG. It is worth noting though that in the AfDB’s Integrated Safeguards System (ISS), for projects that include “commercial agriculture and forestry plantations (particularly those involving land clearing or afforestation)”, borrowers are required to locate these on either already converted or highly degraded land.[4] This is a valuable step towards avoiding contributing commodity-driven deforestation. To strengthen this approach, a commitment to zero net commodity-driven deforestation should be considered.

Forestry

In the CCGG, the AfDB identifies Agriculture, Forestry, Other Land Use (AFOLU) as an investment priority for both climate adaptation and mitigation, and references forestry throughout. The framework recognises sustainable agroforestry and sustainable forest development and management as critical for mitigation efforts, citing the AFOLU sector as accounting for over 50% of GHG emissions in Africa. Accordingly, eligible investments include land-use approaches to reduce deforestation and degradation, e.g., through afforestation and reforestation programmes (including agroforestry, urban forestry, and mountain forest management), and preventing deforestation from biomass use through improved regulation and generation. The establishment of community forest management committees is also mentioned.

However, the CCGG does not commit the AfDB to any dedicated forestry-related targets. This is an unwelcome change from the Climate Change Action Plan 2016–2020 which included as many as 15 commitments directly targeting forests, including for example to “implement […] REED+, conservation, and sustainable forest management activities […] to avoid about 50 million tonnes of CO₂[eq.] emissions”. Discussions between E3G and the AfDB have revealed that the dropping of these targets was a result of the rechannelling of forestry funds towards COVID recovery.

The AfDB’s ISS excludes “use of logging equipment in unmanaged primary tropical rainforests” as part of its “negative list” of banned public and private investment activities. However, the scope of this exclusion is narrowly defined, and does not cover support for any other logging activities. The ISS also mandates that “In projects whose main objective includes the extraction of renewable natural resources – such as forestry […] – these resources are managed in a sustainable manner, with preference for internationally recognised systems of certification of sustainable management and use”. Notably, this requirement only guards against direct impacts on forests, meaning that indirect deforestation is left unchecked by the ISS. Borrowers or clients for activities such as plantation forestry are required to assess affected habitat and implement best international management practices, but the ISS does not provide further specifics.

The AfDB continues to administer support – in the form of both direct financing (including grants and concessional loans) and technical assistance – to several African countries under the Forest Investment Program (FIP), which is funded by the Strategic Climate Fund (SCF), one of the two Climate Investment Funds (CIF). As of 2023, the AfDB is responsible for the largest (43%, totalling USD 111 million) share of the public funding for this programme, with a further USD 91 million contributed by CIF (35%). The FIP is active in 11 African countries.

Moreover, the AfDB is a major partner of the “Great Green Wall” project (a pan-Sahel proposal to green the southern edge of the Sahara Desert and thus hold back the impacts of desertification). The AfDB has committed to mobilising USD 6.5 billion towards the Great Green Wall initiative by 2025. This amounts to 20% of the total funding from all partners needed to deliver on the 10-year priority investments for the project by 2030, and represents a clear display of the Bank’s leadership and commitment on this issue. 

Recommendations:

• The AfDBs Climate Change Strategy Framework should include an explicit commitment to zero net deforestation across the portfolio, supported by stronger exclusions on unsustainable logging within the Bank’s safeguards as part of its “negative list” of banned activities, as well as policy support for the development of country forest goals and associated strategies.
• The AfDB should reinstate forestry-related targets as part of its Climate Change Action Plan, particularly related to emissions reductions, phasing out commodity-driven deforestation, and supporting countries in developing policies and legal measures that ensure sustainable forest management.
• With regards to how the ISS ensures sustainable forest management, the stated “preference for internationally recognised systems of certification of sustainable management and use” should be strengthened to become a requirement. Moreover, the ISS should be updated to explicitly include safeguards against indirect deforestation.
• The AfDB’s biodiversity tracking system for screening for potential biodiversity co-benefits should be applied both as an ex-ante and an ex-post tool, used at the early project preparation phase and for monitoring and evaluation.
• Noting the deforestation risk posed by the use of first generation biomass, the AfDB should put safeguards in place to ensure that biomass projects are only funded if they use second or third generation biomass.

[1] Although, it is worth noting that it is not made clear how exactly biodiversity co-benefits are defined, and therefore what the criteria for qualifying as a co-benefit are.

[2] As of early 2024, this does not appear to yet have been developed.

[3] Information received directly from the AfDB.

[4] Relevant safeguarding measures are set out in full as part of the ISS, covered under the “Climate risk, resilience, and adaptation” metric.