Integration of climate into bank sectoral strategies

Methodology

This metric involves a qualitative assessment of integration of climate mitigation and resilience in sectoral strategies, judged by the degree to which mitigation and resilience are featured and considered a priority in each sectoral strategy. In terms of sectors, we adopt the sectoral categories from the Organization for Economic Co-operation and Development (OECD), namely transport, energy and water and sanitation. To this we have also added cities/urban as a separate sector.  ‘Telecommunications’ is also categorized as a sustainable infrastructure sector by the OECD but is not included here for most MDBs as they do not have a large amount of investment in telecommunications and these are less relevant to climate change.  

To be ‘Paris-Aligned’ there must be evidence of integration of both resilience and mitigation in the key sectoral strategies (transport, energy, water, cities) with clear reference to the Paris Agreement or the MDB’s standalone climate strategy (which itself should have a favourable assessment).  Broadly speaking, at least 75% of sectoral strategies have to be Paris aligned and there must not be a non-aligned strategy in order to achieve Paris alignment overall, but in each case we make a qualitative judgement based on our analysis. 

To be ‘Transformational’ there must be integration of deep decarbonisation and structural resilience in key sectoral strategies (transport, energy, water, cities).  ‘Deep decarbonisation’ refers to a pathway which gets economies to net-zero emissions by 2050.  In terms of integration of adaptation to climate change, ‘structural resilience’ refers in this Matrix to institutional and governance structures that integrate resilience, including overcoming systemic barriers to resilience.  

Please note that agriculture is covered under the “Nature based solutions” metric. 

Evolution of this indicator 

More research could be done into how water strategies can reflect both climate mitigation and adaptation. For example non-water based sanitation systems can be used to mitigate GHG emissions and the electricity consumption of water and sanitation systems is considerable.  

Future iterations of this metric could also look at how sectoral strategies implement the concept of “do no harm” to the Paris Agreement, which has been defined by I4CE as “all activities should neither hinder nor be counterproductive to the achievement of climate objectives and should be consistent with long-term national sustainable and low-GHG, climate-resilient development pathways”. 

In the future E3G may look at also assessing industrial lending strategies, if applicable.