The Agence Française de Développement (AFD) Group has become the first Public Development Bank (PDB) to abstain from financing fossil fuel projects for three consecutive years (2020-2022). This groundbreaking achievement not only cements the AFD Group’s position as a climate leader, but also sets a powerful example for other Public Development Banks (PDBs) to follow. In recognition of this milestone, AFD has been upgraded to a “transformational” rating for the “non-fossil to fossil energy ratio” metric within E3G’s Public Banks Climate Tracker Matrix.
Following the final COP28 Global Stocktake text that included language on “transitioning away from fossil fuels” but fell short of a stronger commitment, UN Secretary-General Antonio Guterres stated that “fossil phaseout is inevitable”.
In support of their government’s policies and in partnership with their clients and other key stakeholders, Public Development Banks (PDBs), with assets over USD 23 trillion, can play a pivotal role in facilitating the development of policy frameworks conducive to fostering a clean and just energy transition across the world. In this context, AFD emerges as a leader amongst PDBs through its push to phase out fossil fuel financing.
AFD had previously been phasing out fossil fuels investments while increasing investments in renewable energies. According to OCI data, in 2015, when the AFD made its pledge for Paris alignment, AFD allocated USD 2.88 towards clean energy for every USD 1 invested in fossil fuels. For commitments in the period 2018 – 2022, this ratio of clean energy investment had gone up to USD 25. More significantly, between 2020 and 2022* the AFD Group ceased all new funding for fossil fuel projects. As a result AFD is the first PDB assessed by E3G to achieve a complete phase out from new fossil fuel investment for three consecutive years.
Who’s next? Other Public Development Banks should follow suit
AFD’s proactive approach in combating climate change sets a strong example for other PDBs to follow. Among PDBs assessed by E3G, the European Investment Bank is the only other institution that has also phased out fossil fuel financing, having done so since the beginning of 2022. The AFD should continue using its role as a leader to facilitate the transformational leadership within the wider PDB community.
See the assessment here to find out more about AFD’s alignment with the Paris Agreement.
* Data for 2022 was directly provided to E3G by Agence Française de Développement and has not yet been published.
