Inter-American Development Bank

Standalone climate strategy and integration of climate in overarching strategy

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.

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Paris alignmentReasoning
Some progressClimate is well integrated into the Inter-American Development Bank’s (IDB) climate and overarching strategies. Clear Paris alignment target date and plan and do-no-harm principle are missing.
Climate strategyOverarching strategy
 The Climate Action Plan reflects mitigation and resilience alike. Misses a clear commitment to Paris alignment, including date and plan, and the “do-no-harm” principle.Climate change is integrated into the Inter-American Development Bank Group’s overarching strategy.

Explanation

Overarching strategy

Climate change remains a cross-cutting issue in the Institutional Strategy approved in June 2019 to achieve the bank’s three strategic priorities: social inclusion and equality, productivity and innovation, and regional economic integration.

The Corporate Results Framework states that IDB “has established a target that 65% of new projects approved  over  the  2020-2023  period  should  support  climate  change  mitigation and/or adaptation, up from 53% from 2016 to 2018.” This is high compared to other MDBs. The IDB further details that “these indicators are complemented with results indicators to track the amount of GHGs reduced through IDB financing and, for the first time, track the number of beneficiaries of enhanced disaster and climate change resilience, among others.”

Both strategies refer to the Paris Agreement, but stop short of a commitment to a roadmap, a date for full alignment or acknowledgement of the do-no-harm principle.

Standalone climate strategy

In the IDB Group Climate Action Plan 2016-2020, climate change and environmental sustainability is identified as one of three cross-cutting issues underpinning development in the region. The strategy includes the following actions: aligning with IDB strategies; strengthening collaboration and mobilizing external resources; actions to further mainstream climate change into IDB; and sector-specific opportunities; as well as measuring results.

As part of the implementation of the action plan, the Bank has created the Climate Change and Sustainable Development Sector team which will be responsible “for mainstreaming climate change and sustainability considerations in the design and execution of projects and Country Strategies.”

IDB states that it is going to align its operations to support countries to deliver their Paris commitments, known as Nationally Determined Contributions (NDCs), and it is encouraging cross-ministerial dialogue to promote policy consistency and create synergies so as to translate NDCs into specific investments. However, as for other MDBs, the approach is largely demand-driven, as such their goal of increasing climate finance is conditional on their clients’ priorities. 

IDB highlights the importance of including climate change not only in the project cycle but also at the upstream level, particularly when strategic dialogue with clients takes place. Following the launch of the Task Force on Climate-Related Financial Disclosures (TCFD), 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.

IDB Invest, part of the IDB Group, published its first TCFD disclosure in March 2020 as part of its annual report 2019.

IDB will publish its updated Climate Change Action Plan by the end of 2020. It is expected that this will incorporate Paris alignment. This section will be updated accordingly.

Recommendation: For Paris aligned, commit to do-no-harm principle to Paris goals in overarching strategy. Update the Climate Action Plan to indicate the Bank’s driving role in climate action beyond demand from countries.

Recommendation for transformational: Explicitly describe evidence that both deep decarbonisation and resilience as well as a roadmap for alignment with a 1.5°C scenario is being implemented.

 

 


 

Last Update: November 2020

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