African Development Bank

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:

$53 billion

Headquarters:

Abidjan, Côte d'Ivoire

Top five shareholders:

Nigeria, Algeria, USA, Germany, Egypt and Canada

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.

Metric	Summary
Promotion of green finance	Paris aligned: The AfDB partakes in and has launched leading regional initiatives (such as the African Green Bank Initiative) to mobilise private sector finance and green the financial system. The Bank has a green bond programme which has been operational since 2013 and is governed by the 2023 Sustainable Bond Framework. The AfDB has deployed innovative financial instruments at both the portfolio level for balance sheet optimisation (such as through the innovative synthetic securitisation “Room2Run” scheme and exchanging sovereign risk exposure with other MDBs) and at the operational level through tailor-made financing.
Fossil to non-fossil energy finance ratio and scaling up climate finance	Some progress: Between 2019 and 2022, for every USD 1 the AfDB provided to fossil fuels, USD 3.19 went to clean energy, USD 2.22 went to transmission and distribution (which typically cannot be attributed to any one energy type), and USD 1.05 went to other energy (which can include mixed energy, nuclear, or biomass projects).[1] The Bank’s energy lending ratios reflect a clear prioritisation of renewable energy financing as part of the overarching goal of achieving universal energy access. The year-on-year trend in the ratio of clean energy finance relative to fossil finance is notably promising in this regard. The necessary centrality of access considerations to energy financing in Africa is also reflected in the significant proportion of energy investments dedicated towards transmission and distribution.
Nature based solutions	Some progress: Biodiversity and nature based solutions are both identified as priority areas in the Climate Change and Green Growth (CCGG) Strategic Framework, with associated actions and targets (of variable detail). While there is clear evidence of investment in forestry, the Bank only has a narrow exclusion around logging, and no associated targets for reducing commodity-driven deforestation, or for targeting zero net deforestation.
Climate risk, resilience, and adaptation	Paris aligned: The AfDB has a comprehensive set of procedures for project level climate risk screening and management that are applied widely. However, further clarity on certain details of these policies is still needed. Climate risk criteria are extended to all clients, and there is evidence the Bank is working to develop and improve capacities among clients in this regard. The AfDB continues to be a transformational performer among MDBs on adaptation finance: it provides more finance for adaptation than for mitigation, and champions innovative, leading initiatives in this space.
Overarching climate strategy	Paris aligned: Both the AfDB’s overarching Ten-Year Strategy 2024–2033 and its Climate Change and Green Growth Strategic framework comprehensively integrate climate change mitigation and adaptation. The former makes clear reference to the goals of the Paris Agreement and limiting warming to 1.5 °C, while the latter provides a framework for Paris alignment, with a clear timeline and tangible quantified targets for 2021–2025. The overarching strategy explicitly commits the AfDB to go beyond “do no harm” across its operations in pursuit of development gains. However, the climate change strategy only makes a commitment of “do no harm” with regard to biodiversity. This would benefit from being revised to a commitment to “do good beyond do no harm” to climate change and the environment across all operations. A truly transformational strategic approach to climate change will require a suitably strong set of indicators and ambition in the AfDB’s upcoming Results Management Framework 2024–2033, as well as clearer language on the AfDB’s role in proactively identifying and lowering barriers facing African countries in pursuing the “lowest-possible-carbon” development trajectories, and its role in providing those countries with targeted support to align with these trajectories within the framework of a just transition, in line with the Bank’s approach.
Integration of climate mitigation and resilience in key sectoral strategies	Some progress: Climate is integrated into the AfDB’s sectoral strategies to a mixed degree. The Bank’s formal sector policy documents are generally outdated for the sectors covered by this assessment (energy, transport, water, cities, and agriculture), with inadequate inclusion of climate change and Paris alignment. However, the prominence of relevant recent strategic updates in some cases, such as notably in the energy and water sectors, indicate that the Bank is implementing stronger sectoral strategy and action in practice. Despite this, policy updates for the energy, transport, and agriculture sectors are needed, to reflect up-to-date ambition and action in line with climate goals and the Paris Agreement.
Institutional leadership	Paris aligned: The AfDB has displayed regional institutional leadership in several areas, including access to clean energy, mobilisation of green finance, and on adaptation and resilience. Across these areas, notable examples of leading initiatives including the New Deal on Energy for Africa, the African Financial Alliance on Climate Change, and the Africa Adaptation Acceleration Programme.
Energy access and fuel poverty	Some progress: Energy access is a priority area for the AfDB, being at the core of the “Light up and Power Africa” “High 5” transformation area established by the Bank. This is evidenced by the recent launch of the M300 initiative to provide energy access to 300 million people. It is further reflected in the highly ambitious energy access targets, strong monitoring and reporting on progress, and very high (and increasing) proportion of energy financing being dedicated to energy access. However, progress towards targets (both the Bank’s overarching universal access target, and the disaggregated targets within the Annual Development Effectiveness Review) has been very limited. Despite alluding to refining a minimum definition of access “in due course”, the Bank has also yet to clearly adopt and consistently apply a working minimum definition of access across its operations.
Energy efficiency strategy, standards and investment	Unaligned: The AfDB has signalled its intention to increasingly integrate energy efficiency considerations as part of its Strategy for The New Deal on Energy for Africa 2016–2025. However, energy efficiency remains insufficiently integrated in key sectoral work, and there are no clear specific standards required for financial intermediaries to apply.
Fossil fuel exclusion policies	Some progress: In practice, the AfDB has stopped financing coal, as well as upstream oil and gas. However, neither of these exclusions have been formalised as part of the Bank’s energy sector policy (a critical step in order to be considered Paris aligned in this area). Discussions with the AfDB have revealed that downstream oil and gas financing is permitted only in cases where a Long-Term Strategy (LTS) is in place. There is no evidence of any supply-side efficiency exclusions or standards being in place (such as safeguards against contributing to lock-in or stranded asset risks, or explicit emissions performance standards relating to fossil fuels).
Greenhouse gas accounting and reduction	Some progress: Across sectors, the AfDB’s updated Integrated Safeguard System (ISS) requires borrowers to conduct ex ante GHG estimation (gross and net), to be reported as part of project appraisal reports (PAR). However, the Bank does not quantitatively define the thresholds for inclusion under this requirement nor the scopes covered, potentially hindering consistent application across operations. While there is no portfolio-wide gross emissions or emissions reduction target, there is a tracking system in place for energy sector emissions reductions with an accompanying target.
Shadow carbon pricing	Unaligned: The AfDB does not currently use a shadow carbon price across its operations. However, as part of its 2021–2030 Climate and Green Growth Strategic Framework the Bank committed to pursuing the strategic application of internal carbon pricing (albeit without any timeline or concrete steps for doing so).
Country level work	Transformational: The AfDB’s country approach includes comprehensive consideration of climate change, including both mitigation and adaptation. The Bank’s Climate Change and Green Growth Strategic Framework explicitly refers to the mainstreaming of member countries’ Nationally Determined Contributions (NDCs) and Long-Term Strategies (LTSs) in both its country and regional level strategic engagement frameworks. This includes specific reference to scaling up grant funding and technical assistance to support member countries in strengthening their national climate policy documents. Moreover, the Workplan and Programme of the Africa NDC Hub (for which the AfDB hosts the secretariat) has as a priority the development of a methodological framework for NDC revision (from 2020 onwards), with the aim of increased ambition over time.
Technical assistance for implementing Paris goals	Paris aligned: The AfDB’s technical assistance offering is extensive for both policy level climate-related technical assistance, and for project level support. The Bank supports NDC implementation and critically also explicitly commits to support raising ambition as part of NDC revision where possible. Project level technical assistance is provided across sectors, with notable key examples in the energy sector, building climate resilience and in natural resource management.
Transparency of climate finance data	Some progress: Transparency of project level climate finance data at the AfDB is strong, particularly for its sovereign portfolio. However, despite disclosing some details of its financial intermediary lending, its disclosure for these operations remains insufficiently granular. To become Paris aligned on this metric, the AfDB should consider providing the data underlying its submission to the joint MDB report in a machine-readable format and improving the disclosure around subprojects financed through financial intermediaries.