Nature based solutions

Nature based solutions

The IsDB’s Climate Action Plan (CAP) 2020-2025 identifies NBS as a key approach for both climate adaptation and mitigation. The relevance of this area to the Bank’s operations is demonstrated by the fact that over 25% of its member countries have integrated NBS considerations in their NDCs and adaptation plans, particularly in sectors such as agriculture, forestry, water, and coastal areas.

The Bank has accordingly taken significant steps to integrate NBS into its climate resilience investments through the development of comprehensive guidance and sector-specific approaches. Through its Guidance on the use of Nature-Based Solutions for Climate Change Adaptation (developed in collaboration with UNEP) the IsDB provides detailed guidance for integrating NBS approaches that restore damaged ecosystems, conserve biodiversity, and demonstrate integrated sustainable natural resources management across key sectors.

The NBS guidance document provides a conceptual framework for the integration of NBS throughout the project cycle, comprising eight components from initial gap analysis, through to project development and implementation, and ultimately measurement, reporting, and verification. The document also identifies specific candidate NBS interventions across key sectors, with a particular focus on the agriculture, transport, and water sectors.

There is also a dedicated section covering the IsDB’s role in contributing to enabling the scaling up of NBS for climate adaptation. Key activities identified include:

1. Enhancing finance mobilisation through the development and deployment of innovative mechanisms and crowding-in other sources of finance.
2. Broadening funding support through utilising instruments that proactively address funding and financing gaps for NBS.
3. Partnering with local financial institutions interested in expanding their green portfolios through NBS pilots and products.
4. Supporting access to climate finance through integration of NBS in project pipelines across climate finance vehicles and as part of wider conventional lending packages with member countries.

The document represents strong evidence for the Bank’s active consideration of NBS as part of its climate adaptation efforts. However, no equivalent document has been developed for climate mitigation. Moreover, it is unclear to what extent the guidance is a mandatory part of the IsDB’s typical project cycle, and therefore serves as a consistent, systematic screening process for identifying NBS opportunities in the Bank’s project pipeline. The guidance does not set out concrete, verifiable follow-up actions and activities that the IsDB will adopt to enhance the usage of NBS.

Notably, the Terms of Reference for the forthcoming Green and Sustainability Strategy 2026-2030 incorporate frequent reference to nature, biodiversity and ecosystems, with this being identified as a likely thematic priority.[1] Promoting use of nature based solutions for climate adaption is in turn specifically recognised as an activity in this area. Moreover, the Bank’s internal “Blueprint for Green Finance” document contains extensive coverage of nature finance, including through setting out potential supporting activities under the upcoming Green and Sustainability Strategy 2026-2030. [2]

Biodiversity

The IsDB’s Climate Change Policy (CCP) and CAP (2020-2025) make limited reference to biodiversity, either as a cross-cutting priority area and/or with regards to its interlinkages with climate action. The former does refer to “maintaining biodiversity” as part of defining green growth as a core policy pillar but does not provide any more substantive coverage of the topic. The CAP in turn only makes reference to biodiversity in the context of describing the  Agriculture and Rural Development Sector Policy’s coverage of integrated natural resources management. The IsDB has not yet developed a dedicated biodiversity strategy that would align with best practice among peer institutions.[3] In view of the significant linkages (and potential for co-benefits and joint solutions) between climate and biodiversity, the topic’s relative lack of consideration across the Bank’s key strategic climate documents is significant.

That said, the IsDB’s significant support for combatting desertification, naturally results in overlap with biodiversity.[4] For example, as of late 2024 the IsDB has developed a Financing Framework for Sustainable Dryland Development which makes substantial reference to biodiversity considerations in this context. As part of its focus on sustainable dryland management (SDM), the framework refers to the synergies with biodiversity protection and the potential linkages between the Global Biodiversity Framework and United Nations Convention on Combatting Desertification (UNCCD) through the emergence of established nature finance approaches.  

Although the IsDB participated in the development of the MDB Common Principles for tracking nature-positive finance, there is no evidence of the Bank actively tracking and reporting nature finance at the portfolio or sectoral level.[5] More broadly, there is no evidence of dedicated actions and/or targets for the Bank to mainstream biodiversity considerations across its portfolio, nor the development of dedicated initiatives and/or instruments (although examples of these are noted in the Financing Framework for Sustainable Dryland Development).

Agriculture and livestock  

The IsDB’s Agriculture and Rural Development sector policy makes explicit reference to the importance of nature protection and biodiversity conservation across sectoral activities, with specific reference to sustainable use of natural capital and the protection of critical ecological areas.

“Building resilience and climate-smart agriculture” is the first of six policy pillars for the sector policy, with reference to supporting both adaptation and mitigation measures in the sector. However, dedicated actions or indicators for monitoring the implementation of this approach are not included. Moreover, the document makes no specific reference to halting deforestation. This is a particularly notable omission given the global relevance of agricultural commodity-driven deforestation.

Forestry

The IsDB’s core climate documentation does not provide extensive coverage of the Bank’s approach to forestry, nor does the Bank appear to have any dedicated programs for forest restoration. The CAP notes that deforestation was identified in consultations for its development as an area deserving greatest attention, but does not include any further references to this topic throughout the remainder of the document. The Bank’s Environmental and Social Safeguards (ESS) policy does not explicitly make any reference to sustainable forest management.

Relevant strategic documentation from the IsDB lack any specific requirements or targets for achieving zero net deforestation. The Bank does not appear to have established concrete targets for reducing deforestation, nor developed specific commitments around forest conservation.

Recommendations:

• Building on its comprehensive guidance for NBS for climate adaptation, the IsDB should consider:
  • More clearly setting out how the guidance will be integrated in the Bank’s project-level approaches as a way of ensuring there is a consistent, systematic screening process for identifying NBS opportunities in the Bank’s project pipeline.
  • Developing comparable and complementary guidance for climate mitigation.
  • Exploring the development of dedicated initiatives and instruments for specifically incentivising and scaling up interventions making use of NBS.
• In view of the significant interlinkages between biodiversity and climate, the IsDB should consider developing a dedicated strategy for mainstreaming biodiversity-positive considerations across its operations, in line with international standards (either independently, or at minimum integrated as part of the forthcoming Climate Change Action Plan 2026-2030). This should include accompanying indicators for monitoring and reporting progress.
• The IsDB should consider including explicit reference to the need to halt agricultural commodity-driven deforestation as part of its Agriculture and Rural Development Sector Policy. This should be accompanied by explicit safeguards against this as part of the Bank’s ESS.
• The Bank should consider making an explicit commitment to zero net deforestation as part of its forthcoming Climate Change Action Plan 2026-2030. This should include outlining clear steps towards fulfilling this commitment, such as through incorporating dedicated language for preventing deforestation as part of the Bank’s ESS.

[1] Information received directly from the IsDB.

[2] Once the Green and Sustainability Strategy 2026-2030 has been drafted and published, E3G will review the content of this metric to incorporate any relevant updates.

[3] See in particular efforts by the IDB in this regard.

[4] The IsDB’s support for combatting desertification is clearly evident such as through its USD 1 billion pledge to the Riyadh Global Drought Resilience Partnership during UNCCD COP16, as well as its part in the Arab Coordination Group’s (ACG) pledge of USD 10 billion by 2030 to combat desertification and land degradation.

[5] Relevantly, the IsDB’s internal “Blueprint for Green Finance” document suggests that the forthcoming Climate Change Action Plan (or Green and Sustainability Strategy) 2026-2030 will ensure the Bank integrates international practice on nature finance tracking across its operations.