AfDB: Overview

Founded:
1964
Mission:
"To fight poverty and improve living conditions on the continent through promoting the investment of public and private capital in projects and programs that are likely to contribute to the economic and social development of the region."
Total assets:
$35 billion
Headquarters:
Abidjan, Côte d'Ivoire
Top five shareholders:
Nigeria, Algeria, USA, Germany, Egypt and Canada
Summary of Paris alignment assessment:
The African Development Bank is not yet Paris aligned. The Bank shows leadership in areas that are particularly relevant to the markets it operates in. This includes energy access, where it is the only MDB that is Paris aligned and technical assistance for NDC implementation and green growth. Areas that need particular improvement are the integration of climate into sectoral strategies and the application of internal carbon pricing. AfDB is also a leader in financing adaptation.

This page is part of the E3G MDB Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

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MetricSummary
Promotion of green financeParis aligned – The Bank is active in green finance and engages often with central banks, especially in knowledge sharing and capacity building. 
Fossil to non-fossil energy finance ratio and scaling up climate financeSome progress –  AfDB financed fossil fuel projects between 2016-2018 so cannot be considered Paris aligned, but for every $1 the AfDB provided to fossil fuels, $7.4 went to renewables and $11.8 goes to energy networks (transmission and distribution) between 2016-2018. 
Nature based solutionsSome progress – Some biodiversity commitments and limited exclusion around logging. Intention to scale up nature based solutions, but concrete strategies needed.
Climate risk, resilience, and adaptationParis aligned – Substantial evidence of project based and systemic adaptation and climate risk assessments.
Overarching climate strategySome progress – The Climate Change Action Plan 2 is close to being aligned with the Paris Agreement. The overarching strategy could be more explicit on climate change. The High Five Agenda are well integrated into the CCAP2, but have little commitments on climate on their own. 
Integration of climate mitigation and resilience in key sectoral strategiesUnaligned – Very limited integration of climate in some sectoral strategies, and no mention of climate in transport or water strategy. 
Institutional leadershipParis aligned – Leadership in specific areas such as energy access and resilience. 
Energy access and fuel povertyParis aligned – In line with the High 5 Agenda, AfDB has an ambitious Bank-specific target and monitors progress relatively well, but is behind target on access to clean cooking energy and could improve data availability. 
Energy efficiency strategy, standards and investmentUnaligned – Few energy efficiency standards in key sectors.
Fossil fuel exclusion policiesSome progress – Only upstream oil and gas exploration excluded.  
Greenhouse gas accounting and reductionSome progress – GHG accounting at project level but no reporting at portfolio-level and no target for peaking or reducing GHGs set. 
Shadow carbon pricingUnaligned – No shadow carbon price. 
Country level workSome progress – The Bank’s country approach is mindful of climate change, including mitigation and adaptation, but does not appear to account specifically for NDC ambitions. 
Technical assistance for implementing Paris goalsParis aligned – Technical assistance to support NDCs, fossil fuel subsidy reform and green growth.
Transparency of climate finance dataSome progress – Transparency of financial intermediary lending needs improving.

Recommendations

  • AfDB should commit to a specific target date for Paris alignment. The Bank should also consider a deeper integration of climate in its sectoral strategies and strongly linking these to its good overarching strategy framework.  
  • The AfDB should expand its fossil exclusion policy. Even coal has not been excluded so far. This requires an update to reflect AfDB’s climate ambitions. 
  • Improve work on nature-based solutions. The AfDB needs to integrate nature-based lending across sectors where appropriate. The Bank’s Climate Change Action Plan should include an explicit commitment to (net-) zero deforestation across the portfolio, as well as policy support for country forest goals.  
  • The AfDB should significantly improve its energy efficiency standards, as this will be an important issue for Africa moving forwards. The Bank has established few energy efficiency standards in relevant sectors such as buildings and should improve this. 
  • The AfDB should expand its greenhouse gas accounting. The AfDB should explicitly provide information on the GHG accounting reporting at project level for the sectors covered by the GHG emission accounting tool. 

Leadership area

AfDB is a leader in the area of climate risk screening. AfDB is the only MDB to have a target to reach parity of adaptation and mitigation finance flows by 2020. In fact, the Bank exceeded its target of achieving parity between adaptation and mitigation finance by allocating 55% of its climate finance resources to adaptation and 45% to mitigation.  AfDB has also developed an innovative mechanism known as the Adaptation Benefit Mechanism (ABM) with the aim to support adaptation through a transparent and efficient results-based mechanism. The mechanism is currently being piloted and E3G will continue to monitor its implementation.

Last updated: November 2020.

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