Islamic Development Bank
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.
Metric | Summary |
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Paris aligned – The IsDB engages with an array of partners to help member countries ‘green’ their financial systems. |
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Not applicable – no information available for this metric. |
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Unaligned – Commitment to no deforestation for green finance lending but no evidence of commitments in areas of nature based solutions. |
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Some progress – Evidence of good project-level climate risk screening. Further work needed at portfolio level and enhancing client climate resilience. More progress also needed on adaptation finance. |
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Some progress – The strategic framework of IsDB for climate change is comprehensive and details how IsDB intends to align with the Paris Agreement. IsDB clearly links its climate change strategies to the overarching strategy. However, the strategy misses a clear timeline for Paris alignment. |
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Some progress – The IsDB has put in place multiple sector strategies that incorporate climate effectively. The approach to adaptation in the energy sector should be highlighted as transformational best-practice. |
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Paris aligned – The IsDB has shown itself to be a leader in Islamic green finance and incorporating climate and sustainability into their approach to the Islamic finance industry. |
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Not available – It is unclear whether a bank-specific goal has been set and whether progress monitoring is taking place. |
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Unaligned – IsDB energy policy mentions efficiency but further information on exact standards applied needed. |
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Unaligned – No policies to restrict financing of fossil fuels at IsDB, although significant exclusions are applied to IsDB “green” finance under the Sustainable Finance Framework, which is a first step. |
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Unaligned – No GHG accounting at project or portfolio level. |
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Not available – no information available on carbon pricing at IsDB. |
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Paris aligned – The Bank integrates climate change in a number of country strategy documents, and supports members in NDC “improvement” and implementation. |
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Paris aligned – Partnerships within the IsDB and with partners in place to provide NDC and non-NDC climate related technical assistance. |
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Unaligned – There appears to be very little transparency of IsDB operations, although the bank has just started contributing to the Joint MDB Report on Climate Finance. |
Recommendations
- The Islamic Development Bank (IsDB) should commit to specific energy efficiency standards for transport, buildings and financial intermediary projects.
- The Bank should consider setting a bank-specific energy access target and develop a method of monitoring progress against this.
- Explicitly provide information on the GHG accounting and reporting at project level for the sectors covered by IsDB policy.
- IsDB should move beyond the project-level climate risk analysis should put in place a dedicated system-level resilience strategy.
- The Bank should include NDC ambition into its “Reverse Linkage” philosophy of Technical Corporation Programme Framework to help member countries reach their “fair share” contributions.
Leadership area
The Islamic Development Bank is a leader with regards to integrating sustainability into the Islamic financial system. The Bank’s first Green Sukuk, valued at EUR 1 billion in 5-year Trust Certificates, is proof of their efforts to bring sustainability into the financial system of its member countries in a way that is respectful of their needs. The IsDB should use its knowledge of Islamic financial systems to guide peer MDBs and encourage their activity in this sphere, where relevant.
Last updated: November 2020.