E3G’s 15 metrics of Paris Agreement alignment at public and development banks

 

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.

Below is an overview of our approach to Paris Agreement alignment at public banks and how we have defined each level of alignment for each metric. More detail on each metric is found in the respective methodology tabs which can be accessed from the home page of the Matrix. This is intended to be a detailed and granular approach to Paris Agreement alignment, going further than and building on the approaches set out by the Multilateral Development Banks, bilateral development banks and European Development Finance Institutions.

Approaches to Paris alignment from MDBs, IDFC and EDFI.
Multilateral, bilateral and European DFIs all have similar but slightly different approaches to Paris Agreement alignment.
Climate finance
Promotion of green finance More info
Unaligned
Lack of support for green finance; instruments show lack of private finance mobilisation
Some progress
Limited promotion of green finance and green fiscal and tax reform; instruments' use of private finance, guarantees and credit lines are limited. Lack of progress in resilience and mitigation.
Paris aligned
Promotion of green finance across financial actors such as in banks, local and national institutions, insurers and regulators. Innovative instruments mobilise private finance effectively to address resilience and mitigation, with evidence of risk-taking.
Transformational
Driving systemic change across all financial actors such as local and national institutions, insurers, central banks and regulators. Use of financing instruments are innovative and transformational, addressing adaptation and mitigation needs and risks.
Non-fossil to fossil energy ratio and scaling up climate investment in all sectors. More info
Unaligned
The ratio of fossil fuel investment to climate-related energy investment is below or equal to 1.5.
Some progress
Climate investment increasing and the ratio of fossil fuel investment to climate-related energy investment is higher than 1.5.
Paris aligned
Scaling up climate investment in the energy sector and fossil fuel lending is at zero across a 3-year period.
Transformational
Scaling up climate investment in all sectors. Fossil fuel lending is at zero across a 3-year period.
Climate risk, resilience and adaptation
Nature based solutions More info
Unaligned
No mention of, or poor quality, nature based solutions. Limited protection of biodiversity, no climate-related agricultural standards, lack of support for forests, tropical deforestation and conversion of high value ecosystems permitted.
Some progress
Some assessment of ecosystem impacts of agriculture projects. Some commitment to not finance logging and protect old forests in place.
Paris aligned
Some use or promotion of nature based solutions, good protection of biodiversity, climate-related agricultural standards, commitment to net-zero deforestation, initiatives for restoration of natural forests and peatlands and forestry policy support.
Transformational
Nature based solutions recognised and promoted as alternative to grey infrastructure; agricultural development assessed against climate impacts and complying with targets; commitments to exclude financing of carbon-intensive agricultural practices; assistance in reducing harmful agricultural subsidies; supporting sustainable protein and healthy oceans; commitment to zero deforestation and reversing natural forest loss; restoration of peatlands and natural forests, measures to address structural drivers of forest loss.
Climate risk screening and assessment More info
Unaligned
No project-level climate risk management, very little adaptation finance.
Some progress
Basic project-level climate risk management, lack of systemic approach to resilience.
Paris aligned
Comprehensive project-level climate risk management, enhancing client resilience, and scaling adaptation finance.
Transformational
Promoting project-level climate risk management, leading identification of structural needs, and catalysing broader adaptation finance flows.
Internal activities
Standalone climate strategy and integration of climate in overarching strategy. More info
Unaligned
No standalone climate strategy and no integration of climate into overarching bank strategy.
Some progress
Limited climate strategy or no indicators to monitor progress and/or limited integration of mitigation or resilience in overarching strategy.
Paris aligned
Comprehensive climate strategy, integration of mitigation and resilience in overarching bank strategy. Either one or both strategies refer to principle of “do no harm” and alignment to Paris Agreement.
Transformational
Integration of both deep decarbonisation and resilience in strategy, roadmap for alignment with 1.5°C and strong evidence of implementation.
Integration of climate into bank sectoral strategies More info
Unaligned
No integration in key sectoral strategies.
Some progress
Limited integration in some sectors.
Paris aligned
Strong evidence of integration of both resilience and mitigation in key sectors (transport, energy, water and cities) with clear reference to the Paris Agreement or public bank's standalone climate strategy.
Transformational
Integration of deep decarbonisation and systemic resilience in key sector strategies.
Institutional leadership and information sharing. More info
Unaligned
No evidence of transformational leadership; lack of initiatives with transformational potential; lack of engagement with other public banks.
Some progress
Some evidence of leadership but lack of transformational initiatives, tends to follow others.
Paris aligned
Champion in climate-related areas; large number of transformational initiatives, uses initiatives to engage with other banks, leads from the front.
Transformational
Pioneering champion and thought leader in many transformational initiatives, deep engagement with other public banks to drive forward progress.
Mitigation
Energy access More info
Unaligned
Not monitoring energy access / lack of data, and no strategy or policy.
Some progress
Limited strategy or policy on energy access, limited progress on monitoring.
Paris aligned
Measuring basic and modern energy access, comprehensive strategy.
Transformational
Measuring equity balance in basic and modern energy (how much energy access targets the poorest), plus use of and targets for Sustainable Energy for All multi-tier indicators.
Energy efficiency strategy, standards and investment More info
Unaligned
Lack of integration of basic efficiency standards, low investment in efficiency
Some progress
Incremental changes to improve energy productivity, some investment in efficiency
Paris aligned
Energy efficiency standards across all sectors promote best available technology and identify investment needs; no carbon lock-in efforts
Transformational
An energy efficiency first principle drives innovative approaches to delivery of efficient infrastructure. Demand side reduction prioritized over additional supply-side infrastructure where possible; new infrastructure only built to highest energy efficiency standards.
Policies to restrict finance to fossil fuels More info
Unaligned
No fossil fuel exclusions or evidence of recent fossil fuel investments.
Some progress
Exclusions on coal and associated infrastructure and upstream oil and gas.
Paris aligned
Exclusion of all fossil fuel finance; already implemented exclusions on coal and upstream oil and gas.
Transformational
Total exclusion of fossil fuels and related infrastructure with official policy and full implementation, direct and indirect lending. Programmes to retire and replace coal and other high-carbon assets with renewables.
Greenhouse Gas accounting at project and portfolio level More info
Unaligned
No GHG accounting at project or portfolio level.
Some progress
Limited, sectoral or full tracking of emissions but no target to reduce emissions.
Paris aligned
Have a comprehensive approach to project-level GHG emissions and an ambitious absolute emissions target for greenhouse gas to be achieved across the portfolio.
Transformational
Science-based target to reduce portfolio emissions (or better), covering both direct and indirect lending and Scopes 1, 2 and 3.
Shadow Carbon Pricing More info
Unaligned
No shadow carbon pricing
Some progress
Carbon pricing but inadequate level or lack of clarity on how it is used
Paris aligned
Carbon pricing in line with the High-level Commission recommendations, used across all sectors
Transformational
Carbon pricing is above the high price recommended by the High-level Commission and regular appraisal is done to reflect the latest science and tipping points. Scope 3 emissions are included for all projects.
Engagement & policy support
Integration of climate into country level work More info
Unaligned
No integration into country work
Some progress
Limited integration into country work
Paris aligned
Integration of both mitigation, resilience and NDCs into country work with support beyond existing national plans
Transformational
Country work used to drive deep decarbonisation and build systemic resilience
Technical assistance for implementing Paris goals and national transitions. More info
Unaligned
No evidence of technical assistance to help implement Paris Agreement goals; or evidence of technical assistance misaligned to Paris.
Some progress
Limited standalone technical assistance on Paris goals, or technical assistance that is not fully aligned with Paris goals. Implementation of existing NDCs that are >2C without raising ambition.
Paris aligned
Evidence of technical assistance programmes to implement and raise ambition of existing NDCs, not necessarily consistent with 1.5°C but within 2°C, considering fair share contribution.
Transformational
Programme to help implement Paris Agreement goals and raise ambition of NDCs consistent with 1.5°C. Supporting countries with ambitious regulatory and market reforms to implement deep decarbonisation.
Reporting
Level of transparency of climate related information More info
Unaligned
Lack of transparency of any climate related projects
Some progress
Limited transparency and disclosure. Some project level information available
Paris aligned
Full project level information available including detailed descriptions and sector information in the OECD database. Sub-projects of financial intermediaries are disclosed
Transformational
Institutions report the underlying data in joint MDB reports and all sub-projects of financial intermediaries are disclosed

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