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.
|Extensive promotion of nature based solutions; relatively weak commitments on forestry.
Nature based solutions
An IDB report on nature based solutions identifies the need to mainstream nature based solutions within policy and the tools and skills required of project promoters. A follow up report on increasing infrastructure resilience with nature based solutions is a guidance note to project promoters on how to incorporate nature based solutions into their climate resilience projects. IDB is clearly therefore looking to generate more awareness of this topic, but it is unclear however how much financing the IDB has provided to projects that incorporate nature based solutions.
IDB has also created a Natural Capital Lab to test new models of natural capital finance.
The IDB climate change strategy references the need to “strengthen governance of indigenous territories as a means of protecting forests and conserving biodiversity and support models of payment for ecosystems”. It also references the need to “balance the needs of socio-economic activities and ecosystems”. It does not, however, appear to specifically mention the use of nature based solutions in response to climate change.
The IDB’s Environment and Safeguards Compliance Policy requires that the bank proactively helps recipients identify projects that protect biodiversity.
IDB has developed a sustainable infrastructure framework that has a strong focus on biodiversity.
The IDB’s internal regulator or watchdog has found that IDB’s climate-related investments in the agricultural sector have mainly been in the field of climate adaptation, and that the bank is just beginning to focus on climate mitigation through agriculture. It recommended more focus is needed on issues around cattle ranching. IDB approved a climate-smart agriculture fund in 2015. A recent IDB article has noted that livestock emissions can be reduce by increasing productivity but IDB has not yet looked as systemic shifts towards sustainable protein sources as a driver of resilience and global biodiversity protection.
In 2020, IDB released a report which noted that highlighted how shifting to healthier and more sustainable diets, which reduce meat and dairy consumption while increasing plant-based foods, would create jobs and reduce pressure on the region’s unique biodiversity. LAC’s agri-food sector could expand the creation of 19 million full-time equivalent jobs despite 4.3 million fewer jobs in livestock, poultry, dairy and fishing.
Amongst its activities on forests, the IDB supports programs and policies to clarify tenure status of forested lands, including the creation and establishment of protected areas. It is notable that forestry projects have benefits for both mitigation (by enhancing forest GHG sinks) and adaptation (by improving the climate resiliency of the surrounding ecosystem). IDB also works on policies and programs with National Development Banks that intensify agricultural production as a means to reduce the expansion of agriculture into forest areas. However, there appears to have been relatively less focus on upstream policies to reduce drivers of deforestation.
The IDB’s Environmental and Social Policy Framework makes little mention of forestry, only referencing the need for sustainable management of forests in general.
Many countries in Latin America and the Caribbean include forests and land use as a vital part of their NDCs under the Paris Agreement. The government of Brazil is now working on its national strategy for implementing and financing its NDC, and as part of this process, the IDB has worked with the Ministry of Environment to create a “base document” to initiate discussions.